Does taking out a traditional small business loan from a bank send a chill down your spine? Don’t get spooked. Small business loan alternatives can take your business to the next level.
Traditional lenders make business loans a scary proposition for small business owners. Banks require collateral, but many young companies don’t hold much value or have a long financial history. Other reasons small businesses get turned down for loans include a low credit score (under 630 FICO), less than 3 years in business, or a capital need of less than $100,000. Taking all that into account, you may not have a ghost of a chance at securing a traditional loan.
But before you could say “pumpkin spice latte” three times fast, alternative lenders have stepped in to fill the void. These new loans don’t require collateral and are easier for small business owners to obtain.
3 Reasons Small Business Loan Alternatives are a Better Fit for Your Company
Alternative lenders are flexible on loan length, interest rates, and repayment terms. You can find lenders who grant short and long-term loans and some lenders who allow borrowers to repay based on percentage of sales.
Make sure to read the fine print. Some online lenders have low interest rates to lure you in, but add on hidden fees or put you on a strict repayment schedule. Other online lenders require daily repayments, and failure to do so can result in higher rates.
Your business is thriving in the digital age, but banks still handle business like it’s 1995. Many traditional lenders still require you to print out applications and supporting documents and fax them over. If you just asked yourself “what’s a fax,” you might be interested in alternative lenders, which allow you to apply online.
With Fundbox, the online application takes about twenty seconds to complete. Enter your email, choose a password, and select your bookkeeping app—that’s all there is to it. Fundbox allows you to use your bookkeeping app just as before, but outstanding invoices are automatically available for you to clear in your secured Fundbox account. Click on any outstanding invoices to get the amount transferred to your bank account instantly and securely.
Banks can take weeks to verify revenue and credit scores, while most alternative lenders use high-speed technology to determine whether or not to provide a loan. Alternative lenders go beyond your credit score to look at hundreds, if not thousands, of variables to make a decision. Fortunately, these algorithms calculate your company’s credit-worthiness in minutes, which means you get access to cash within days.
Need money to cover payroll or upfront cash to buy inventory? Set up an account with Fundbox to get the funds to meet your immediate obligations. Fundbox advances the full value of your invoices, and funds are available in your bank account the next day.