Small businesses need to borrow for many reasons. As the diversity of demand increases, so too does the variety of lending options. Traditional lending options often require extensive approval processes that cost valuable time. For that reason, many small businesses turn to alternative financing to fund the unexpected, both positive and negative.
Alternative lending has always been available, so why choose it now? Simple–greater accessibility to capital. Plus, for new businesses with volatile credit and high startup costs, alternative borrowing provides options. Whereas with a bank, you need a preexisting line of credit to receive capital and often the loan is larger than you need.
Finance the Unexpected
For many small businesses, cash flow is unsteady and expenses are high. This uncertainty makes for unforeseeable expenses at a particularly vulnerable time. Alternative financing allows you to acquire fast capital to pay for unforeseen challenges and invest in sudden opportunities. Potential small business setbacks include:
Loss of business due to weather or illness
Drastic, sudden changes in market prices
Replacement of obsolete working capital
Or, on the flip side of the coin, you come across an unexpected investment opportunity, such as:
Potential merge or buyout
Production scale increase
Expansion or franchise opportunity
Discounted inventory purchase
The greatest advantage to alternative lending is fast approval. Unlike in the past, the application process no longer takes weeks or months. Now, approval can be made in as little as 24 hours after submitting. Depending on your credit standing, the amount and the terms, you can have cash in just two days. That means you can jump on opportunities as they arise, confident that you’ll have the capital to move on it. You no longer need to regret missed opportunities due to a lack of cash flow. For small businesses, timing is everything.
Salvation for Startups
For small startups, getting the capital they need through traditional lenders is exceptionally difficult. Many seek private investors or put their personal finances into the business. However, some alternative financing firms seek out startups to secure the cash they need to invest in working capital and other base costs. Using your personal credit history as the basis for your rate, you can build your business off your personal financial standing.
While alternative financing is not for all businesses, for those that have specific investment goals, it can be a lifesaver. Speak with a lending specialist before making any decisions and learn how your business can reach its full potential.