If you have not tried to get a business loan from a bank lately, go try, and you will see how truly difficult it is; the process has become more arduous than ever before (rightfully so). In most cases even if you have a great credit score and are willing to sign a personal guarantee, there is a good chance that you will still be waiting for weeks to hear back on an answer. As interest rates gradually rise, it is likely that more and more businesses will have difficulty obtaining traditional lending. This will lead to what has already been a rapid increase in the alternative lending space. Alternative Lending is a growing financial marketplace for small business to obtain financing through a range of different loan options. Many of the companies within this growing space offer higher acceptance rates and faster approval processes which has generated a spike within the space.
So aside from being a much quicker option than a traditional bank loan, why would a business want to go through an alternative lender, especially considering that this option will likely be more expensive as well? The companies within the space have gotten very good at creating a process that is quick, seamless and offers a handful of different options. Products such as the Business Cash Advance or BCA allow merchants to sell future receivables over a specified time period (in most cases 6 months to a year). The benefit of a product like this is that it allows a business to sell a fixed amount of it’s future receivable to pay back a loan, so in a slower month the business would be paying back a smaller amount of the balance than a busier month. On top of that, a BCA usually doesn’t take your credit score into account nor will it require collateral or a personal guarantee. There are plenty of other products offered by alternative lenders besides the BCA, and if your business is in need of financing you should really check them out as they have substantial upside when compared to the loans offered by your neighborhood bank.