When banks let you down, there are other ways to get funding. If you initially financed your business with family loans or your own money, there may come a time when you will need to get finance from other sources. Alternative money lenders offer a range of services, from bad credit loans to equipment financing. If you decide to apply for funds from a non-bank, here are some things to consider.
What is Alternative Lending?
You may be surprised to know that many people have never heard of alternative lenders and some have no idea what they do. They are organisations that lend money outside of your normal institutions. There are many different types of alternative loans, so you should find it easy enough to get approved for one that suits you. Alternative lenders deal with bad credit debit consolidation loans unsecured, short & long-term loans, asset loans and a range of other options.
Here are some of the difference between traditional banks and alternative lenders:
- More flexibility
- Faster application process
- Faster turnaround
- Less specifics
Most conventional banks take weeks to process loans and put the money in your account, alternative lenders are quite the opposite. Applications can be completed online in less than an hour and you can sometimes have the money in your account with 24-hours.
Because alternative lenders tend to deal with people who have bad credit or need a loan fast, the interest rates are slightly higher than traditional banks. This is understandable as they can approve a loan for someone with a poor credit history and have funds transferred to their account within days. They are taking a big risk, so the interest rate is going to be higher than a conventional lender.
If your business needs immediate capital, alternative lenders are a good option. It is important not to rush your decision, but some opportunities only come around once every few years and if you need funds fast, an alternative lender can help. Alternative lenders tend to be faster in terms of approval and funding delivery.
As you can see, there are many differences between alternative lenders and traditional lending institutions. There are advantages and disadvantages to using both, it all depends on your needs and circumstance. If you need money fast with little hassle, an alternative lender is a good option. In certain circumstances, banks and credit unions are a better option.