2017 June 18 Archive - EXEIdeas – Let's Your Mind Rock

Nowadays, you need not always turn to your local bank when your business is in need of a small business loan. With alternative lending solutions, you can obtain financing right from your office by simply going online.However, it is important that you educate yourself on alternative lending options before obtaining a business loan from an alternative lender. You need to know when it is best to use alternative lending options and when to use traditional lending options.Read on to find out when obtaining business loans from alternative lenders is the best option for your business.When You Are Unable To Obtain A Business Loan From A BankFollowing the financial crisis in 2008, alternative lending became increasingly popular after banks drastically dialed back on offering small business loans. Alternative financiers filled the financing gap, setting up websites where businesses could easily access quick cash through speedy applications processes.Technology has played an important role in the continued rise in the popularity of alternative lending options. It made it possible to quickly determine the creditworthiness of loan applicants, with lenders swiftly analyzing various data online, such as tax returns, bank statements, etc.There are four primary types of alternative financing options.Line of credit: In this case, alternative lenders, such as libertylending.com, provide you with a specified amount of money that you can access when the need arises. It is typically made available if you need a short term business loan to deal with temporary cash-flow problems.Term loan: You borrow a lump sum, which you repay over a specified period ranging from a few months to five years, with the annual percentage factored in. This is the cheapest option.Merchant cash advance: With this option, the alternative lender gives you an advance on future debit/credit card sales.Invoice factoring: Also referred to as accounts receivable financing or invoice financing, this option is made available to small businesses that are struggling with unpaid invoices. Rather than waiting for the invoice to be settled, your business obtains an advance on your yet-to-be-paid invoice, which you pay back once your customers pay you.Admittedly, banks also offer great deals. Getting your application approved is difficult, especially if you don’t have a great credit score. Bank requirements are also quite stringent and the waiting period can be unreasonably lengthy, which takes us to our next point.When Your Business Is In Need Of A Quick LoanAlternative lenders are particularly useful when your business faces an emergency or when it has a pressing need for cash. If, for example, your business runs out of supplies or the business premises requires urgent repairs, waiting weeks to receive funds is not an option. Easy access to alternative funding enables you to immediately handle the situation.Banks typically require you to provide multiple documents, such as financial reports, business leases, etc., whereas alternative lenders ask for only a few documents, usually to determine whether your business has the cash flow that can support loan payments.About the Author:Evans Connor is a contributor to numerous blogs and websites aimed at providing advice to small businesses. He has over 23 years of experience of business and entrepreneurship. To learn more about business loans, visit libertylending.com.Find Me On GooglePlus | Facebook