Many of our clients first come to us with little or no knowledge of the alternative lending industry. Most simply have a need for additional capital and have been turned down by traditional “big bank” lenders and are unaware of the many alternative lending options available on the market today. In fact, big bank lenders approved a record-low 14.8% of small business loan requests in October, 2012. As more business owners and start-up companies become frustrated with traditional lenders and come to Triton for answers, we thought now would be a great time to answer a few questions about the steadily growing alternative lending industry.
What exactly is alternative lending?
Alternative lending is a broad term used to describe the wide range of loan options available to consumers and business owners outside of a traditional bank loan. These alternative options are most commonly used when an individual or business owner cannot obtain a traditional bank loan for any number of reasons. Alternative lenders specialize in utilizing overlooked sources of collateral such as real estate or even outstanding invoices to secure the loan. They are typically more flexible than banks when it comes to repayment schedules and loan approval and often provide cash much faster than their traditional banking counterparts. The alternative lending industry is well-established and generally staffed by well-respected members of the financial services community.
But aren’t alternative loans too expensive?
While alternative loans may sometimes have higher interest rates than traditional bank loans, they fill the gap for small businesses everywhere, providing much needed funding for cash-strapped businesses that have been unable to obtain a loan or line of credit from traditional banks, thereby giving the business owner the opportunity to invest back into the business, manage cash flow and continue to operate for years to come. Any reputable alternative lender will speak with you at length about the best loan program for your business.
What types of alternative loans are available?
There are many different types of alternative loans and several methods for collection as well. Cash Flow Capital commonly handles business lines of credit and asset-based lending for our clients, both of which are good sources of fast, liquid capital for business owners. While business lines of credit work just like those from a traditional bank, asset-based lending uses a company’s scheduled receivables or other assets as collateral for the loan. Other types of alternative loans include medical practice loans which are designed to help grow medical practices, export loans for export businesses, and equity investment loans in which the lender purchases equity in the borrower’s business. Cash Flow Capital offers a wide variety of alternative business loans including VA loans and short-term bridge loans. If you have questions about how alternative lending may work for your business, please contact our office at 305-697-9704.