It's not a perfect world. It rains in the middle of your morning run when you're farthest from home. Your supplier raises prices beyond your budget. The internet is down. Construction outside your door is slowing the traffic coming through it. Your kid is bullied on the bus. Your bank is bullying you. Things don't go right in life and in business. But those who persevere, succeed. Biz2Credit recently released their Small Business Lending Index which reported an increase in loan approval rates by big banks and institutional lenders, up two-tenths of a percent from February 2016 to March 2016, which is good news for small business. Increased funding to a small business helps the economic backbone of any community. But for some businesses for which things have not gone right--credit issues, a big break didn't come, equipment has failed, supplier prices elevated, a natural disaster has held up production--those businesses may need to persevere in other ways.
Alternative lending can mean "Yes"
There are pros and cons any time you borrow. You're held to the standard and terms of your lender, required to repay the amount. But with a loan you have increased cash flow to invest in your business and that can be the difference between success and folding. How do you secure that capital if you've been hearing "no?"
Research lenders and compare your needs to what they offer.
If you have time to gather documentation, write and polish a thorough business plan, and time to wait for traditional bank approval, a traditional bank loan is certainly worth trying for. However, if all you've heard is "no," you might be looking for other opportunities. "Alternative lenders require less paperwork, offer online applications that submit quickly and are processed quickly," according to Nick Yiambilis, VP of Business Development at BizLender, a leading provider of alternative funding solutions on the web. "We require substantially less information to seek and develop lending agreements that work for both you and your lender." Once you choose your lending option, the funds are delivered to your account quickly.
Review your bill paying habits and tidy your credit score.
If you miss payments, your credit takes a hit. Therefore, be sure you're aware of and on top of all the bills that come through your inbox. Pay down outstanding balances if you are able, and correct any incorrect information on your credit report that might be holding your score down. Traditional lenders rely heavily on your credit score and history in making their decisions. Alternative lenders are able to look beyond credit reports because of the types of products they offer. "For example," says Yiambilis, "a merchant cash advance is tied to a retailer's credit card sales, paid down in daily increments. So rather than scrutinize the borrower's credit report, a lender looks at the daily or weekly sales and bases the ability to repay on that sales history."
Gather your collateral.
What guarantee do lenders have that they'll be repaid? Many take collateral when offering a loan, on the chance you are unable to pay the loan back. For a small business owner, sometimes that collateral means personal possessions, a house, car, or other items. Alternative lenders may offer unsecured business loans or loans that don't require a guarantee or collateral. Often, when trying to secure a loan for growth or investment in new technology or equipment, a small business has little to offer in the way of collateral. An unsecured business loan through an alternative lender bases a company's ability to repay through other means. "BizLender establishes a business score, examining factors such as credit history, bank statements, time in business, and the type of industry in which the business operates," says Yiambilis.
Follow your plan
Turning "no" to "yes" can turn a struggling business into a successful one provided the borrower has a plan for the capital and uses it applicably. Although alternative lenders might not require a lengthy business plan to approve an application, it is their aim to lend money to businesses who have a plan in place to implement the funds and grow their revenues. So although things are not always perfect; your new running shoes might be soggy from your morning run, or your bank has turned you down for a loan, you look for alternatives, hang your shoes out to dry, and run again tomorrow.
Researching alternative lending options? Check out BizLender online or call 855-404-3070. Offering lending solutions since 2013, their professionals put the emphasis on working smarter, not harder, using technology to fund small businesses in as little as 24 hours.