When it comes to alternative lenders there are a lot of opinions. Some business owners use them exclusively over more traditional types of financing, while others avoid them like the plague thinking they are an instrument of evil doomed to bring destruction to all businesses. Neither of these extremes are quite right however. As with anything else, there are both pros and cons to using alternative lending sources. When it comes time to make a decision, a careful cost vs. benefit analysis of each option must be made in an effort to determine what is best for your business in your unique situation.
One major benefit of alternative lending is that you can get cash fast. In most cases, the funds can be in your account in 48 hours or less. The application process is generally fast and simple, often happening exclusively online. There are few eligibility requirements also, meaning you avoid a lot of the hassle that comes with traditional lending.
Easier to Handle Repayment Terms
With non-traditional lending options often comes non-traditional repayment options. Daily, weekly, and bi-weekly options are often available in lieu of lump sum monthly payments, and sometimes borrowers can forgo fixed amount payments in favor of payments made as a percentage of daily, weekly, bi-weekly, or monthly sales. This works much better for some small business budgets.
Eligibility requirements for alternative lending are often less strict. Credit score may not even be a required piece of information, meaning that for some, this type of financing is the only option. Generally as long as one can provide sales numbers so that an average can be calculated and a projection made, they are good to go.
Higher Interest Rates
One knock against alternative lending is the high interest rates that non-traditional lenders charge. Loans made without regard to credit score are going to have to have some sort of risk mitigation attached, and most often this is in the form of a higher interest rate than what is going to be seen with traditional lending.
This is also a downfall for some. The amount of funds available may be less than what would be available with a traditional loan, as traditional loan limits are not based on a percentage of projected sales or aged receivables.
Whether you are looking for traditional or non-traditional business financing, Biz2Credit can help you. We cut out the time and money necessary to find lenders that offer the type of financing you need by matching you with lenders from our diverse network, which includes both traditional and alternative lenders. Visit Biz2Credit.com today for more information.