When your business requires a boost in cash flow, securing a traditional bank loan isn’t as easy as it sounds, as your chances of being approved are often slim, at best. This is why many businesses turn to alternative lending for their financial needs. Here are some reasons why this type of lending is worth consideration.
Approval Is Imminent
Perhaps the greatest benefit of an alternative loan is that you quickly have access to your borrowed funds. The application process is often completed online and is far simpler than a bank loan application. Once submitted, your request is usually reviewed and approved within a few days.
Also unlike bank loans, your credit score isn’t always a factor for approval. For example, merchant cash advances are granted based on your monthly credit card sales, so the better your sales have been, the more likely you are to be approved. SBA loans, on the other hand, are partially funded by the Small Business Administration of the federal government and are often granted to businesses that have had difficulty securing traditional loans in the past.
Credit May Not Be Affected
Much like your credit isn’t a factor in your approval, your credit isn’t always affected by your repayment of the loan. Unfortunately, if you pay your loan on time, your credit score won’t go up. On the other hand, if you happen to default, your credit score shouldn’t go down either. For example, equipment financing is a loan that grants funds explicitly for the purchase of equipment. If you were to default on this loan, the lender would simply take the equipment, rather than send you to collections which would negatively impact your credit.
Of course, credit is important. If you are working to build your credit, you can use borrowed funds to pay the bills that will raise your credit score. For instance, a merchant cash advance can be used to get you back on track so that you may start earning credit. The small debt accrued by taking out the MCA won’t harm your credit the way missing payments on bills and commercial loans will, so using these funds to get in the black can be beneficial. Of course, this isn’t a long-term solution but it can be an option for an emergency or short-term assistance.
Alternative lending has helped many new and small businesses boost their cash flow so that they may become more profitable. Consider discussing your business and your needs with an alternative lender today.