Whether you’re trying to finance a new startup, or your company has an unexpected expense, the only constant in the world of small business is the need to access cash. When many entrepreneurs need capital, they automatically think of growing straight to their bank. While that may work for some people, others need to get around the lengthy approval process and slow turnaround time of a traditional bank loan.
For many, small business loans from alternative lenders are a perfect solution. Here are some of the ways they might be better for your company than a bank loan!
Easy Approval Process.
Banks are built on the principle of making “safe” investments. That makes sense, but in practice, their methods for determining the bankability of a company are exhausting and subjective. In many cases, it all comes down to a combination of the business’ credit score and the personal credit score of the business’ owner. Again, that sounds like it makes sense. The reality, however, is that many small companies in a position where they need small business loans haven’t established enough credit for banks to deem them acceptable borrowers.
Alternative funding sources are much more interested in positive cash flow and steady revenue than credit. To approve a small business loan, they only need to see receipts and statements from a short period of time, usually only a couple of months.
Quick Turnaround Time.
Another advantage of a small business loan from an alternative lender is that they move quickly. Typically, it only takes days-not weeks, for them to put cash in your hand. They’re able to do this because they don’t have to take the time to evaluate the volumes of information that banks require, and their decision-making hierarchy is small.
No Restrictions on Use.
For many traditional small business loans, banks will dictate that the borrower must specify a use for the funds they’re supplying. If you need a loan for equipment, it must be used for equipment. If you apply for a loan to make payroll, it can only be used for payroll, and so on and so on. Small business loans from alternative sources can be used for any business expense you need. If you’re approved to borrow, that’s the bottom line. If you agree to the terms and make the payments, the money is yours to do what you need with it.
It’s hard enough to run the day-to-day operations of a small business. When you need an influx of capital, the last thing you need is the anxiety of waiting for a bank’s decision. A small business loan from an alternative lender may be the answer!
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