The Advantages of Using Commercial Alternative Lending
Most business owners need some financial assistance along the way. You might be starting a new enterprise, expanding your staff, or growing your client base. Financial markets and business trends could also be affecting your bottom line. Any or all of these factors (and many more!) may make borrowing money a necessity to keep your company solvent. Fortunately, there’s a way to infuse capital besides applying for a traditional bank loan — commercial alternative lending. Here are several benefits of this option.
Ease of Approval
Credit requirements for alternative lending arrangements tend to be more relaxed than that of traditional loans. A variety of factors related to your business and financial situation are taken into account — not only credit. Paperwork is generally streamlined and reviewed by fewer people. The process of approval is usually faster, and it’s not uncommon for funds to be distributed to borrowers on the same day as the application.
Concerned about loan repayment? You might be relieved to know that alternative lenders have less stringent monitoring requirements than large-scale banks or credit unions. As a result, you’ll more likely to be able to pay back your loan over a longer period of time. Opportunities for leasing equipment and small business cash advances are also possible — again, with the convenience of choosing a longer-term repayment schedule.
Traditional lending institutions usually involve securing collateral from a loan applicant. Collateral is an item of value — material or financial — offered to the lending institution as a lien to ensure a higher probability of repaying a loan. You’re much more likely to find a loan agreement without collateral from an alternative lending company.
If you’re a business owner who’s looking for a more flexible structure outside of standard set terms and pre-determined sums, an alternative lending arrangement will probably best meet your fluctuating needs. Alternative lending arrangements come in various forms; a focused search will likely reveal one that’s a good match for you and your company. Types of lenders range a great deal too, from mainstream firms to angel investors to individual professionals who support your business niche.
Since alternative lenders tend to keep a diversified portfolio and collect information that provides a well-rounded view of their clients’ likelihood of repayment, they’re often able to offer low-interest rates compared to traditional lenders. That’s good news for growing businesses.
Alternative lending might be a perfect fit for your company. Take these benefits into consideration!