A frequently emphasized advantage of working with an alternative business lender (as opposed to a bank) is the availability of “long-term” solutions. This refers to small business loans that do not attempt to put a band-aid on a broken limb. Instead, the business lender works closely with the client to improve his or her business as a whole. You see, arguably the biggest problem with traditional business lenders isn’t the structure or application process of their small business loans. It is the relationship, or lack thereof, between the business lender and the client.
Rather than taking the time to develop sensible repayment terms and bestow helpful financial advice, traditional business lenders prioritize their own short-term gains. It’s not as if the client’s eventual failure is going to do anything to the bank’s reputation. Companies like United Capital Source, on the other hand, are dedicated to facilitating solid strategies that make for a more efficient business model.
1. A Strict Inventory System
Many industries revolve around inventory management, or maintaining partnerships with the right suppliers. In order to stabilize cash flow, the business must cyclically order and pay for certain amounts of inventory within certain time frames. For some businesses, it’s best to order multiple seasons’ worth of items. Others benefit more from “last-minute” purchasing. Some businesses are usually advised to pay their suppliers upfront. Others take the complete opposite approach and are advised to obtain as much credit as possible.
This is just a fraction of the myriad differences between one industry’s recommended inventory management system and another. Prior to the rise of alternative business financing, only a few types of small business loans were available for all these different systems. Today, businesses not only have more options (revenue based business loans, working capital loans, merchant cash advance, etc) but they can also work with a business lender that knows which option makes the most sense for their individual circumstances. We can even show you how to use your funds to gradually establish an inventory system similar to that of your most successful competitors.
2. An Inability To Save Money
Traditional business lenders favor potential borrowers with a lot of money in the bank. Most of their clients are heavily capitalized and would therefore have no trouble paying back their debt in the event that their desired investment falls through. But the truth is, a great deal of these clients were heavily capitalized from the start. Saving up a considerable amount of money is very difficult for various industries. Some must pay their suppliers before they pay themselves or spend the majority of the money they make to offset the money they lost the previous season. Then there’s the industries with absurdly low profit margins, like liquor stores or restaurants.
Saving money and budgeting are crucial for business growth. The terms of traditional bank loans only make it harder to do either but at United Capital Source, we will work to remove whatever obstacle is preventing you from putting an increasing amount of money away. Possible examples include outstanding debts, overpaying for certain business expenses, paying for inventory at the wrong time, or extreme ebbs and flows in cash flow. We also offer numerous business funding programs for under-capitalized businesses, which would otherwise have to dig into personal or operational funding to stay competitive. Our special small business loans for women were created because women tend to start their businesses with much less capital than men. In our opinion, someone who has overcome so many obstacles early on is more trustworthy than someone who has a lot of money at his or her disposal.
3. Fickle Demand Or Business Partners
Every business has its ups and downs, but some industries are perpetually rocky. They are accustomed to financial losses due to various factors beyond their control. More often than not, the underlying problems are fickle demand or fickle business partners. To recover from the losses, the business might reduce staff, cut corners in areas where they shouldn’t, or postpone growth-related initiatives. As common as these tactics are, they can only continue for so long. A more sensible and realistic response is looking into a small business loan to help cover business expenses, like a business line of credit or working capital loan. This way, the business can maintain productivity and focus on decreasing the likelihood of this particular misfortune occurring again.
These Are The Real Ingredients For Success
Business growth is complicated. There are many ingredients to success, and each must be obtained in a certain order. You deserve a business lender that can provide the resources required for almost every one of these ingredients, beginning with the first one that is most dire to your current financial health. A better team or better equipment aren’t the only ways to build revenue. So, please do not fool yourself into thinking small business loans are not for people who need a better business model as well.