Alternative business financing for small business has many options today. Up until several years ago they either had to rely on traditional bank financing or utilize a factor if they had large outstanding receivables. Bank financing has the best rates but it is a very tedious process and factoring is very intrusive. Alternative business financing in the form of unsecured revenue based working capital has evolved and become a common choice for many business owners.
Alternative Business Financing for Small Business
Unsecured revenue based working capital compared to a traditional bank loan differs in that it is a much faster process, requires much less documentation, no collateral or personal guarantees, and funding takes less than a week. These cost much more than a bank loan and the terms are much shorter. So you are paying for faster service and a much higher approval rate compared to a bank loan. A lot of business owners use alternative business financing as an option when they get declined by their bank. 7 out of 10 applicants are declined for a business loan at a bank. Banks require collateral in most cases and always require personal guarantees. There a several alternative lenders that do not require a personal guarantee at all and all of them of no collateral requirements at all.
What Alternative Business Financing Lenders Look For
These private lenders are looking beyond a business owners personal credit score. While credit isn’t an issue it will affect the rate (cost) of the loan and the term (amount of time to repay). They look at the business performance through the bank statements. NSF’s, negative days, daily collected balances, number of deposits, deposit totals, seasonality, type of industry, time in business, and social ratings on Facebook, yelp, twitter, etc…. This is a non traditional method of underwriting and it allows for extremely fast lending decisions (less than 24 hours). The speed and efficiency of this underwriting method provides for a very fast and hassle free funding experience.