How Alternative Business Funding Works for Small Businesses

Small business loans can be notoriously difficult for business owners to obtain. Instead of going the traditional route, small businesses have started to look for some other funding source to get them the money they need to grow their business. Alternative funding has become the place that these small businesses turn to so that they can get the money they need. This article will help you better understand alternative funding and why this could be a good idea for your business.

Is Alternative Business Funding the Right Choice for You?

The first question that you may have is whether or not alternative funding sources are the best choice for your business. Alternative funding is an excellent choice because it not only offers flexibility, but you can also get funding that is tailor-made for your business. These loans have less stringent credit requirements, which can be helpful if you have had a rollercoaster ride but are generally doing well. Alternative funding has a quick application process and a better chance of getting the loan, though you may end up with higher interest rates. This means that you can get an answer, and your money, quicker. If traditional banks haven’t offered you the solutions you need, alternative funding can be the answer.

How Alternative Business Funding Works

There are a few ways that alternative funding works, which is why this can be an excellent approach to consider.

Easier to Meet Qualifications

When you turn to a bank for a traditional loan, they require credit scores that are excellent (usually a minimum FICO score of 690) or have profits over $300,000 to qualify for the best loan for your business. Banks are required to follow a specific set of standards from the government and their bank controllers. However, alternative funding isn’t required to stick to these same guidelines. This allows these alternative funding sources to offer the small businesses a business loan that is more favorable for them. They will take a look at your small business in the long-term, such as predicted growth, when deciding on your loan options.

Flexible Finance Terms

Traditionally, banks only offer cookie-cutter loans that are meant to give them more financial security. This doesn’t work for all businesses, especially those smaller businesses with their own unique challenges and needs. Alternative funding allows for more flexibility, allowing you to find terms that are most agreeable for your business.

Less Overwhelming Application Process

Applying for loans can be extremely overwhelming. You often find yourself in mountains of paperwork and you worry that you may have forgotten some important documents that are necessary for your application. The process is usually lengthy and complicated, requiring you to make appointments with the bank to meet a loan officer or fax the documents. Sometimes it could take months before you even hear a word about whether or not you are getting your loan. Then, you have to wait for funds to be released to you. With alternative funding, the process is primarily taken care of online. This streamlines the process, allowing you to upload your documents rather than having to send them in and hope for the best.

Quicker Response

If you are seeking financing, you likely don’t have the time to wait around forever to get the answer. Many alternative funding sources look at more than just the credit score. This is also done online, meaning that they can process the application and respond quicker. In some cases, you may hear back from the alternative funding company within 48 hours.

Benefits of Alternative Business Funding

Traditional funding is usually the first choice, but unfortunately, it doesn’t always work out. You could try options like crowdsourcing, but this new approach often causes some issues for small businesses. To be successful, you need to properly market your crowdsourcing efforts if you want to succeed. You also run the risk of your business model/idea being stolen. It’s better to go to an alternative financial institution to ensure that your business stays your business. Here are some benefits of alternative funding.

No Need for Collateral

A stressful thing about getting business loans is the idea of putting up things like your home up for collateral. For many alternative loans, you are not required to put up collateral for your loan. This gives you one less thing to worry about.

Not Required to Have Perfect Credit

Not only are you not required to have perfect credit, but you also may not even need excellent credit. Most small business owners, especially those just starting out, have less than ideal credit. Alternative business funding companies will work with your credit to come up with a solution that is reasonable for them and for your business needs.

Short-Term Business Funding Solutions

There are some cases where businesses just need a short-term solution to get them out of a problem or to take advantage of some excellent opportunity that is going to be potentially excellent for their business. Alternative funding sources can find you those short-term solutions that you need to get you through whatever patch you need to get through.

Alternative Business Funding Options

For the most part, there are a few alternative funding options that you can choose from, depending on what your needs are. For instance, a common option is the equipment finance choice. This is where the lender will give you money to make a capital purchase. There are plenty of other different options that you can choose from.

Conclusion

Sometimes traditional loans are hard to obtain or they don’t meet your specific needs. Whatever the reason is, alternative funding can be the perfect solution for you. These are loans that are made for small businesses that can’t get the loans they need or for businesses that want flexible solutions for their financial needs. Maybe you have not-so-stellar credit and need a loan to grow your business. Or maybe you just don’t want to put up your home for collateral. By working with an alternative funding company, you can find the exact solution that will help you meet your financial goals.

At South Florida Funding Group: WE FUND THE IMPOSSIBLE, EVEN CANNABIS!