Banks have been around for a very long time. Historically, when a business owner needed to borrow money to support his business, he went to his friendly local banker. Or, in more recent decades, he/she might have gone to their credit union. Or a similar financial institution. The vast majority of businesses were small, and banks were happy to make small business loans to their neighbors.
Today, we live in a much more commercial world. Personalized banking is all but gone. Banks are big – or huge international conglomerates. And while the vast majority of businesses are still small, banks rarely see them as desirable business loan clients. Too risky, compared to large, well-established companies. And too-small loan amounts to render enough profit. Any small business owner who has been denied a bank loan knows this first-hand. Perhaps that’s you.
THE ADVENT OF ALTERNATIVE BUSINESS LENDERS
In 2014, the Harvard Business School published a detailed report about the state of small business loans. They also concluded that “the reality is that for most banks, lending to small businesses, especially in the lower dollar range, is costly and risky. But it is these lower dollar business loans that are most important to startups and small businesses.” When the Harvard Business School says it, you know it’s not your imagination.
The report goes on. “Lack of access to credit for small businesses is problematic because if credit is unavailable, small businesses may be unable to meet current business demands or to take advantage of opportunities for growth. In fact, they quoted a survey conducted by the Federal Reserve Bank of New York. The survey asked small business owners what getting rejected for credit would do to their business:
- More than 42% said they would have to cut back expansion plans
- 16% said they would be “prevented from hiring”
- 16% said they would be unable to complete existing orders
These results are disastrous for small businesses. Lack of available funding stifles business growth. It can even push your business backward. But where else can you turn? The Harvard report specifically noted the “emerging, dynamic market of online lenders that are using technology to disrupt the small business lending market.”
Here at United Capital Source, we say, “Let’s hear it for disruption!” As an alternative lender, we’re here for your business when banks are not. And we are not some “last resort” option. Alternative small business loans have so much to offer, you’ll be excited about disruption, too.
WHY ALTERNATIVE LENDERS ARE BETTER THAN BANKS
According to CFO, in an article published just last May, “Alternative lenders offer two big advantages over banks: much higher approval rates — alternative lenders approved 61% of small-business loan applications in June — and a far faster application process, often done online.” But that’s just the beginning.
WE’RE EASIER TO WORK WITH BECAUSE WE’RE MORE FLEXIBLE
We offer multiple financing options. Banks offer only long-term fixed loans and, in many cases, business lines of credit. But small businesses need extra working capital for so many reasons. For instance, what if you need to purchase more inventory? Every small business buys inventory of some kind. It’s mission-critical, no matter what you do. But, again, banks don’t like to finance inventory. Technically, there’s collateral, but if you default the bank won’t be able to sell it easily. It’s just too much trouble.
Call United Capital Source, though, and we can offer multiple options. No sweat. You’re good to go.
YOUR PERSONAL CREDIT AND ASSETS AREN’T AT RISK
When banks are willing to make small business loans, they require collateral. And often your personal guarantee, too. Even most SBA loans require a personal guarantee. We know you stand behind your business, but this is asking a lot of small business owners.
YOUR BAD CREDIT DOESN’T USUALLY MATTER
If your small business has bad credit, you’re virtually guaranteed not to qualify for a bank loan. Not so, when you work with alternative lenders. Bad credit does not mean no credit. We may want to know your credit score and history. But that’s the past. What we’re really interested in is your ability to repay now. And your future prospects.
Here’s an example. Every small business needs marketing. So I recently wrote an article about how to fund marketing when your business has bad credit.
YOU CAN GET MONEY WHILE YOU STILL REMEMBER WHY YOU APPLIED
Seriously, timing is a significant issue for small businesses. Things move quickly, and you have to be agile, as they say. If something goes wrong, you have to fix it now, before you lose customers and sales. If some new opportunity crops up, you have to say “yes” before it slips away. Even if it means unplanned up-front expenditures.
Banks re like aircraft carriers. They cannot turn on a dime. Or even a dollar. It takes lots of paperwork to apply for a bank loan. And then there’s a long wait to learn if you’re approved. Meanwhile . . . well, you get the picture. Conventional bank loans definitely have their place. When you need one, you’ll also need good credit. Using alternative lenders to fund your business needs until then will help your business earn that good credit score.
WE’RE MORE SYMPATHETIC, BECAUSE WE GET IT
You’re more likely to be treated like a real person with unique business challenges. If you choose the right lender, you can score a strategically valuable new member of your small business finance team.
LEARN MORE ABOUT ALTERNATIVE SMALL BUSINESS LOANS
Alternative business lenders are many, but they are not all alike. Many are strictly deal-oriented. After all, they’re in the business of making loans. But a firm like United Capital Source has your back long term. Today’s deal is valuable to us only it is the best fit for your current business need. And only if it helps achieve your long-range business goals. That’s why our clients consider UCS a working partner, not merely a source of funds.
So who ever thought “disruption” could be such a good thing? With alternative lenders, you get disruption you can take to the bank – without having to beg for the money you need.