Why Alternative Lenders may be the Right Choice for Your Business
When it comes to obtaining a business purpose loan from your bank, the truth of the matter is that it isn’t always easy. If it were, there wouldn’t be such a noticeable trend showing that over the past decade, there has been an increase in borrowers turning to alternative lenders to help fund and drive growth for their small businesses. Remember—just because you may have been denied a traditional bank loan for a small business or real estate investment, doesn’t mean your dream is dead.
I am sure you have all heard the phrase referencing the fact that there are plenty of fish in the sea. Well, that phrase holds true for the world of lending as well because when it comes to seeking a business purpose loan—there are plenty of lenders for entrepreneurs and investors to choose from. All too often, people tend to get down on themselves after their application for a small balance business purpose loan or real estate investment is denied. This should not be the case nor should it be what stops an entrepreneur or investor from pursuing their dreams.
The truth of the matter is that a lot of people get denied when they pursue traditional financing in order to obtain a business purpose loan. The cause behind the denial may be for a variety reasons. Common causes for loan denial generally stem from when traditional banks feel as though the applicant has:
- – Unacceptable debt-to-income ratio
- – An inadequate amount of collateral
- – Poor personal or business credit history
- – Overdue or unpaid bills
- – Insufficient work and leadership history or experience
- – Little cash flow for ensuring debt repayment
- – A concentration of customers where a bulk of recurring revenue is generated from a select group
- – Requested the loan for an industry that due to economic concerns, is too risky
- – Failed to properly prepare for the business loan application process
- – An unstable financial situation (current job salary, residence & history of both)
Whatever the reason may be, being denied a business loan from a traditional lender shouldn’t cause a borrower any panic because where there is will, there is a way!
For those that may be unsure about the idea of seeking funds from outside a traditional lending facility—it may help to know that at least half of those seeking small balance business purpose loans prefer to go straight to non-traditional lenders. Yes, you read that correctly, and contrary to popular belief, not all borrowers that seek non-traditional business purpose loans need to. They actually choose to do it, which begs to question-
Why borrowers would elect to apply for non-traditional business purpose loans before being denied from a bank?
In actuality, there are many reasons for why a borrower would choose to directly pursue alternative financing. For starters, the borrower may require fast cash for sustaining their day-to-day operations. Funds may also be required for emergency purposes for if say—a vital piece of equipment or machinery broke and needed to be repaired or replaced. Another reason a small business may turn to an alternative lender is because many of them offer more flexible repayment plans. For instance, private lenders have more room to make accommodations and can offer lower payment plans over a longer period of time. In addition, there is generally a lesser chance for rejection when applying for alternative small business or real estate loans. The requirements for loan approval are less strict than when working with traditional banks so for many businesses, they prefer not to have the hassle of going through the entire process only to be rejected in the end. As you can see, there are many benefits for electing to go with non-traditional lenders so if looking for alternative funding for your business—what are you waiting for?
If you are interested in obtaining a small balance business or real estate loan from a non-traditional lender, contact ReProp Financial! We fund loans direct and no loan is too small. Contact us by calling 1-800-444-2948 today!