3 Paths To Finding Alternative Lending
When starting a new business, not everyone has the luxury of readily-available financing. Traditional bank loans can be difficult to get, especially if you have no assets or bad credit. Even if those loans are an option, they could take time you don’t want to spend waiting for approval. Luckily, there are plenty of funding avenues to explore. If you’re looking for other options, these types of alternative lending could be the solution.
1. Online Lenders
Online lenders can be a faster alternative to the classic bank loan, especially if you’re concerned about your lack of assets. Not only do they have a largely automated application process, but they also offer the convenience of completing the application whenever and wherever you’d like. These lenders often consider other aspects of applications to determine whether or not they want to risk giving the funds to certain borrowers. When applying, see if they grant loans to businesses within your industry or if they require businesses to have been in business for a certain period of time. Some will even require a minimum net income.
2. A Line of Credit
If loans aren’t for you, then an alternative lending route like a business line of credit could be used to fund your business. Once you’ve been given a set limit, you can borrow up to that limit, and pay back only what you owe (plus interest). It works similarly to a credit card, and can be useful for short-term funding if you need to purchase product, pay employees, or experience an abrupt stop in cash flow. Even after your initial need for funding, you may want to keep the line in case you need funds in the future.
3. SBA Loans
If you are still interested in a loan but didn’t qualify going the traditional route, the SBA may have some programs you could qualify for. There are several different loan programs for companies of different sizes and business needs. The SBA isn’t a lending institution, but it can be used to secure various types of loans. You can get assistance with your application, which may increase your chances of qualifying. Like online lenders, a variety of factors should be considered from your application aside from your credit score, including your business history and any assets you have.
There are several other options for alternative lending, like merchant cash advances and invoice financing, but they’re not all optimal for every business. The many routes available today give business owners more freedom and control in how they fund their ventures, and with the right research, you can find the right combination to help your business succeed.