Small business owners today should be aware of the many options available for small business loans & financing. This is important because lack of funding at the right time or low interest rates and easy payment terms can make a huge difference to running a smooth operation and eventual success.
It is no secret that conventional bank loans are more difficult to obtain post the recent economic downturn. Big banks have stricter norms, and their processes are not friendly to the way small businesses are run and managed. Fintech has thus come to the rescue of millions of small ventures, stores, startups and local businesses. Their processes are easy, norms friendly and approvals quicker than those of banks.
With alternative loans, online lenders and fintech, getting a loan request approved is just a matter of a day’s time. There are no high credit scores to show, revenue and balance sheets to share or wait periods running into months. Though the interest rates here are high, at least a business can secure a loan for its crunch times and emergencies, and continue operations.
Alternative lending has emerged precisely to serve the needs of those businesses that fail to meet the norms of big banks. This way, a business can stay assured that it will be able to meet working capital needs, pay employees on time, buy inventory or continue spending on marketing and promotions.
Several flavors of alternative lending make it attractive to business owners. They may opt for a cash advance, use invoice finance, take a small fixed loan, or even open up a line of credit. It is not uncommon to see alternative funding range between $50K to $2 million. Loans may get sanctioned within a day or two.
In case of line of credit, the most that an alternative lender may request is for small business owners to show that they have been in active operations for a few months at least. A decent credit score may also apply. Alternative finance or fintech is a boon for many small businesses today given the importance of liquidity and the competition to stay ahead of others.