With the wide range of options in small business lending, business owners of today are finding it very easy to access funds, whenever they are in need. Fortunately, they don’t have to rely on banks that take a long while and adopt a strict process to approve their loans and release funds.
Most small businesses can benefit by having a line of credit from an alternative lender. That way they can dip into their capital whenever they need it and pay interest on only the amount that they have withdrawn till date. Whether they need to purchase inventory, manage payroll or buy equipment, this system can work perfectly for them. Nevertheless, before making the decision, it is important that small business owners compare and contrast a few traditional as well as alternative lenders who can give them their line of credit.
Here are a few major factors that help in distinguishing the lines of credit offered by traditional and alternative lenders:
Banks generally look for predictable small business owners while lending money. They are not prepared to take heavy risks. As a result their standards are very strict and restrictions, extremely tight. On the other hand, the alternative lenders understand the challenges faced by small businesses and cater to the requirements of small business owners conveniently. Even businesses with challenged credit histories find it easy to access funds through alternative lenders.
The banks generally are easier on the interest rates and terms when compared to alternative lenders. This is mainly because their risk level is much lower. Since alternative lenders provide freer access to funds and are more flexible, they charge more in terms of interest rates and fees. It is always better to go through the terms of alternative lenders before signing up for a line of credit.
If you need a line of credit with a higher credit maximum it is better to go for a bank loan. Alternative lenders are comparatively new in the field when compared to banks and financial institutions that have already established themselves or have established partners. Therefore banks can give out bigger loans at cheaper rates than alternative lenders. However, they are very tough to qualify for.
Most small businesses find it hard to offer collateral when applying for loans. Although banks do offer unsecured lines of credits the offers would be much smaller when compared to those of alternative lenders. Alternative lenders are a bit more out-of-the-box when it comes to offering lines of credit without collateral.
Receiving funds within time is very important for many small businesses to meet their emergency needs and survive in the market. Banks make this difficult for them by having lengthy processing times for lines of credit. Alternative lenders are much more efficient as underwriters and are quicker when it comes to offering funding. They leverage advanced technology and superior algorithms to automate their processes.
Alternative lenders make it very easy for small businesses to obtain funds when they are in need. Yellowstone Capital LLC is one alternative lender that focuses on helping small businesses grow. For more information you can see Yellowstone’s profile on zoominfo.com.