Alternative lending is a broad term used to describe the wide range of loan options available to consumers and business owners outside of a traditional bank loan. These alternative options are most commonly used when an individual or business owner cannot obtain a traditional bank loan for any number of reasons.
Business is especially daunting if you’re short on cash. Common wisdom says that one needs cash to start a business and get more cash. Even so-called low-capital endeavours like writing still need some sort of initial funding for things like a computer and finding a place to write and a way to pay for electricity. For everybody else, this means so much more. A person who wants to start a restaurant, for example, needs chairs, tables, plates, spoons and forks, glasses, trays, a cash register and so many more things.
Where does one get funding for such things if there is no rich aunt to run to?
<pstyle=”justify” dir=”ltr”>Some can choose to work for a big company first, save up, and when savings are sufficient, bite the bullet and go chase the dream. While this approach can work, it often does take a long time before the savings are sufficient. Another difficulty here is that working for somebody for such a long time is good training for becoming an employee and not an entrepreneur.
Others choose not to wait so long, securing a loan with a financial institution like a bank to get the necessary funds to get the business dream going much earlier. This situation has its own challenges with the main ones being the paperwork one has to deal with just to apply for a loan and the possibility that the loan application will be denied. It is also possible that even if the loan were successful, the approved amount may not be what is actually necessary to get the business going.
Perhaps the biggest risk here involves collateral – financial institutions may require security for their investment and if a business doesn’t do well, resulting in late loan payments, the lender may be empowered to collect physical assets like the business goods or properties or even the family home!
Suffice it to say that these have often led to many a wannabe entrepreneur to just stay employed and forget about the dream business.
The main issue here is funding and how difficult it may be to get to it.
People have begun looking into other strategies aside from those already mentioned: Individuals of high net worth, venture capitalists, and crowdfunding. The requirements for securing loans and the terms of payment (and collection!) can vary widely depending on where the money came from. Crowdfunding has been getting a lot of attention these past few years relying on a person’s ability to get even small amounts from various individuals to hit a certain predetermined sum. However, a possible downside to the whole approach is being left alone to figure out how to make the business work and make money in a consistent way.
There are specialised independent lending agencies like Ausvance now available to the entrepreneur with distinct advantages over the more traditional loan channel of banks or similar financial institutions. The general idea is that loan applications are simpler with a much higher chance of approval.
These seemingly small factors of simpler application process and higher change of approval do a lot of things already. Less paperwork simplifies matters and, for a beginning businessperson who may not have a financial adviser or accountant, this allows the brain to focus on the business itself without having to devote an inordinate amount of brain matter or time to administrative work. The other issue here is that a beginning entrepreneur’s energy and enthusiasm may easily be sapped with the frustration brought by rejected loan approvals. It may also happen that the timing for a launch to market may be lost either to competition or unforeseen circumstances.
What about getting a fast update on a loan application? Characteristic of lending agencies like Ausvance is the quick turnaround time – you really won’t be kept waiting for very long. Nothing is more frustrating than being told to wait and wait and then eventually getting a denial on your loan application. At the very least, getting told quickly if an application is successful or not allows one to look around for better options if necessary. Approval can happen within one to three days and funds released within two weeks.
This, however, also means one more thing: You really do have to move fast also. All the advantages of getting a loan approved with the least amount of headache are negated if you are not able to capitalise on the opportunity timing has given. This means getting down to work and ensuring that all loan payments are provided for.
Now, if you already have a good business idea, a plan for it laid out, and a good location, this may be the best time to contact us to see just what your prospects may truly be.
Or call 1300 760 930 to speak with one of our friendly Lending Consultants now.