Dramatic growth on the alternative lending front and technological advances have made it easier than ever for entrepreneurs and small business owners to secure funding. Alternative lending, the term used to collectively describe non-traditional bank loans, is expanding at a rapid clip. It’s estimated that by 2020, 20 percent of small business loans (or approximately $52 billion) will be made by an alternative lender. That’s a 940 percent increase from 2017, when small business loans made by alternative lending sources totaled $5 billion.
- Having trouble securing funding the traditional route? Don’t give up. When changing regulations make small business loans less attractive for traditional banks, alternative lending models provide options. The types of loans to consider include asset-based lending, revenue-based financing, Small Business Administration (SBA) loans, pawn loans, crowdfunding or even family and friends. Do your due diligence in researching each option, and be sure that you’re using a trusted and dependable source for your funding.
- SBA loans bridge the gap between the traditional and non-traditional loan world. In certain cases, a Small Business Administration (SBA) loan can present a great alternative. Under this type of loan structure, the SBA offers a guarantee to the bank or lender making the loan (and promises to pay a portion back if the small business owner defaults). While paperwork and qualification can be hurdles, in late 2017, the Small Business Administration changed the requirements for SBA loans, increasing chances of approval.
- Fintech is making it easier to finance a business with convenience and speed. With recent (and rapid) innovations in financial technology, business loans, applications and payments can now be completed without ever visiting a teller window or physical bank branch. And, its prevalence is increasing exponentially — the worldwide investment in fintech increased twelvefold to $12 billion in early 2015, up from $930 million in 2008. For traditional and alternative loans, fintech is being used to customize commercial lending options for businesses of every size and scope. But costs can vary widely — as you review your options, be sure that you are working with a reputable, experienced lender who can provide financial solutions and expertise that help you — not only their business.
Is your business looking for funding this year? Contact us to work with a proven, trusted business lender who can provide valuable insights and counsel every step of the way.
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