What is Alternative Business Funding?
Alternative business funding or loans is a kind of business funding not given by a bank.
Why Alternative Business Funding?
If the thing is this news headlines it seems that banks are selling a lot more small company loans compared to the last several years. But if you read deeper into this you'll see that the little Business Administration (SBA) defines a small business as 500 employees or less an under $7.5 million in revenue. That makes up about almost 99% of all companies in the United States.
Alternative business lenders are simply that the option to your traditional bank. Alternative Funding came into existence to help what you and that i would think about a small company, get funding to aid their business growth.
When it comes to securing capital for the business, whatever the reason, often times a bank will decline you for a financial loan. A conventional bank declines over 70% of all applications searching for financing. This could be due the following reasons:
- Less than perfect credit score
- Not enough time in business, typically a conventional bank really wants to see at least 24 months in business
- Annual revenue is simply too low
- You may not have enough collateral
Of those businesses that are approved for funding, the average amount borrowed is $350,000 from the traditional bank.
What concerning the smaller businesses that require only $5,000, $10,000, $30,000 or $75,000?
Traditional banks will turn away small businesses looking for this little bit of capital. Running a business less than 2 years-.you can just about forget looking to get financing from the bank. FICO under 650-good luck!
This is the reason why the alternative business funding sector of private lenders has exploded within the last several years and continues to grow. In fact, alternative business financing has become the fastest growing sector of business financing in the united states.
Speed of Alternative Business Financing
Alternative business lenders have been providing capital to businesses for a while now. These lenders have been filling the void and providing much needed capital to those business people who've been declined with a bank.
Strong analytics, data mining, technology, and leveraging big data has allowed alternative lending companies to provide financing very quickly. A lending decision could be provided in only Twenty four hours. No way your bank could do this.
Required documentation is minimal. A couple of months of our most recent business bank statements as well as an application is all it will require for an approval (or perhaps a decline) within 24 hours. With this particular information at hand lenders can underwrite your approval or denial in Twenty four hours or less.
Making the borrowing process fast and friction-less has catapulted this industry to become viewed as a genuine viable option to get business working capital.
Making probably the most of the Assets
There are also types of alternative business financing. They are factoring, that has been around the longest, and asset based lending. Both tend to be lower rates and longer terms.
Factoring is really a prepayment on your accounts receivable as much as 70-90% the value. After which your client pays the lending company and repay themselves plus 3-5% fee. This kind of financing is perfect when you do a larger job having a client that requires 30-90 days to pay for, then you would use a step to assist you with income.
Asset based loans are collateralized with equipment, real estate, inventory, etc-. something tangible which has value to other people.
Alternative Business Funding Expectations
The procedure for applying and receiving business capital through this process is hassle free and fast.
With that you should understand there is a price to pay. In most cases, a conventional bank loan might be able to provide the least expensive capital. If declined, you have this different business funding outlet as an option.
Due towards the high-risk nature, for the alternative lender, associated with this funding process the expense of capital tend to be higher. Expect to pay rates as between 15% and 45% repaid over 3-18 months for a working capital advance. However, there are other funding options available with lower rates and longer terms.
Funding is Available for You
Regardless of what type of alternative business financing you use, the thing is that there's capital available to you in case your bank turns you down for a financial loan.
Small Business Funding is definitely an alternative lender that may provide your company with financing. We also provide relationships with other top alternative lenders in the country. We work with you to find the very best suited financing package to satisfy your requirements.
Whether it's to have an expansion, maintenance to equipment, purchasing new equipment, new hires, buying an additional franchise, or for capital small business funding will secure the choice business financing you'll need.
To observe how much alternative business financing you can be approved for click here or call direct at 1-800-742-2995