Alternative lending is any lending that occurs outside of a conventional financial institution. Alternative loans tend to be more flexible than traditional loans and often have faster application turnaround as well. There are many different types of alternative funding available, so there is likely an alternative loan out there that suits your small business’s circumstances.
As we mentioned before, not all online lenders require collateral for loan approval. In short, an unsecured business loan is based on your creditworthiness as a borrower. Some lenders—namely, bank lenders—will require that you begin with a secured business loan to establish a relationship. This relationship will enable you to take out that unsecured loan. With online lenders, however, you have more options for better approval odds:
Unsecured long-term loans are extremely rare, but they do exist. The unsecured long-term business loans can range from terms of a few years to a few decades, depending on the amount you need to borrow. Since these types of loans for larger amounts of money and require a longer repayment term, online lenders typically require records of your business’s history.
If you’re starting a coffee shop business, your approval odds for this type of loan will not be in your favour.
Unsecured short-term loans, on the other hand, are much easier to qualify for as a new business owner. Most of these short-term loans have a repayment term of one year or less. They’re the type of loan you take out if you need new equipment, are going through a slow season, pay unexpected expenses, are expanding, or for other short-term reasons.
Short-term unsecured loans are best for small business owners, and they don’t necessarily require records of your professional history.
Merchant Cash Advances (MCAs) are another type of unsecured business loans that are ideal for businesses that deal with a lot of credit or debit card sales. The repayment terms of this loan are determined by a percentage of your daily credit and debit card transactions. In other words, the agreed-upon rate between you and your lender is taken out of those daily credit and debit card sales to pay back the loan.
There are no fixed payments required for a Merchant Cash Advance, which is a great convenience. Of course, upon deciding if an MCA is right for you, you’ll want to take a close look at the loan’s interest rate and the required percentage of sales being offered by your lender. If you only qualify for MCA terms with high-interest rates and a large portion of daily transactions, this option may not be as beneficial for you as having a fixed payment.
If starting a cafe is your dream, then online business loans are your best bet in getting the funding you’ll need. If you’d like to find out more about unsecured loans for small businesses, you can check out our website or contact us with any questions. Let us worry about the money while you worry about the coffee.
Picture this: your company is relatively new on the block, and has started gaining ground on the competition in terms of market share. However, competing firms have begun expanding their operations response to your company’s emergence. Keeping up with the game will require “upholstered” marketing and operational plans as well as new structures, all of which point toa sudden need for sizable funds.
The world of business in itself is a series of calculated risks and pushing forth with large purchases can sometimes entail the need for the involvement of third-party lenders. Alternative lending may be the ideal option given this scenario. The same goes for a lot of companies affected by an economic recession.
Alternative lending offers a comfortable and flexible payment scheme, much to the convenience of enterprises in need.
Sometimes, though, small business owners can’t qualify for these loans or need something shorter term or more flexible. In these cases, alternative lenders offer various ways to access the capital you need to grow your small business. Alternative loans come in many shapes and sizes, so you can generally find the right one for your current needs.
For a growing company, especially one that keeps pace with the advancements in 2015, acquiring and installing all the necessary equipment would require a bulk of the cash. The first thing that comes into mind is getting a business loan. Alternative lending, in the form of a Merchant Cash Advance, can present a more straightforward loan payment method, thus allowing new enterprises to borrow more funds.
Since the payment is staggered – based on the arrival of credit card sales – those who opt for alternative lending have the luxury of borrowing large sums of cash, which can be turned into additional staff, machinery and even a financial pillar for expansion. In a nutshell, the success of your company figures in paying for the owed sum, a far cry from the terms that usually come with traditional financing.
The resulting financial freedom allows new companies to manage their cash flows, make valuable purchases and fill up all their basic staffing needs with relative ease. Partnered with an in-demand product/service and a series of sound strategies, an enterprise should likely experience a progressive growth in sales to cover for the amount owed in the long run. Your success is the alternative lender’s success, to put it simply.
Without the proper grasp of one’s cash flow, an entrepreneur will be surprised at the sudden surge in expenditures and perhaps forgo necessary spending in favor of the perception of preserving business capital. It’s tough to run a business if you have no idea whether you’re making money out of a particular venture. Here is where cash flow management and lending come in.
Upon noting down all of the company’s sources of income and expenditures, you’ll have an idea on where you should concentrate your funds, prepare for future expenses and consider possible loans. Alternative lending enters the fray with smaller daily collections, which are easier to manage than a staggering figure payable at the end of the month. Payments are relaxed and come with smaller amounts, giving business owners more control over their finances.
This way, companies can allocate small loan payments daily, without getting in the way of their operational necessities.
New forays into technology, like big data and digital marketing, can turn a budding enterprise into a well-oiled profit generating machine. The thing that stands between a company and those high-tech amenities, however, is a sizable amount of cash – which not all companies have, new ones in particular.
Normally, a generous bulk of funds can be doled out by a lending company if an enterprise has a favorable credit score. Gaining such takes time, putting new companies at an immediate disadvantage. Alternative lending, through an unsecured business loan, is the golden ticket in this scenario.
An unsecured loan has lower credit and income requirements, fitting the needs of new companies that are experiencing progressive growth, albeit small scale. The interest rates may be higher than secured loans, but if your business has taken on a rather profitable path, paying for your dues would not be too troublesome in the long run.
Let’s take a look at some of the requirements for traditional business loans. Banks and financiers would necessitate an entrepreneur to hand out their tax returns, credit history and rating, a comprehensive business plan and so forth. This tedious process takes time and effort, which could have been focused on essential endeavours, such as improving the business process or attracting more clients.
Fortunately, this is not the case with an unsecured loan. This type of loan though tagged with more risk does not always require tax returns, credit card processing and complex paperwork. In less than three weeks, a qualified organisation can already obtain much-needed funding from an alternative lender, thus propagating more focus toward growing the business and not on the loan.
Starting a business is easier said than done since most ventures come with an array of expenses that not every budget can afford. Even if you have just enough to cover the initial expenditures and the operating capital, the cash-outs expand over time and new ventures don’t always prove to be successful at first. Don’t fret, it’s not the end of the world; far from it to be honest.
Financial institutions that provide alternative lending allow prospective business people to follow their entrepreneurial dreams and perhaps make it on the industrial front. The terms they provide are geared to accommodate the financial capacities of these business owners. The small daily payments from an unsecured loan don’t make large dents on one’s finances while the stretched payment scheme of a Merchant Cash Advance lets a new business grow before compelling large settlements.
The initial stages of putting up a business are often the hardest, and a new entrepreneur would love to have as much breathing room as possible in terms of cash. Alternative lending, for many, happens to be that breathing room.
Chances are someone else has had the same question and the answer will be in our FAQs.
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