Traditionally, credit unions do not do business with non-members. In recent years, some credit unions have expanded their membership requirements, to encourage more participation. Even if you are a member, though, you might not qualify for a small business loan. Especially if you have bad credit.
Your chances might be better than with an unknown bank. But maybe not much better. That’s because credit unions are very similar to traditional banks. So you’ll need to meet the same requirements. It will take time and paperwork to apply for your business loan. And you’ll need good credit. You may have to put up collateral. And a personal guarantee. Even with all that, it might not be a good fit.
The reason is simple. Like commercial banks, credit unions have lending goals. They don’t have stockholders, but they do have members. In order to protect members’ interests, the credit union must be conservative. For that reason, they really don’t want to make certain kinds of small business loans.
Their goals and your needs may not match up.
ALTERNATIVE BUSINESS LENDERS VIEW THE MARKETPLACE DIFFERENTLY
United Capital Source is an alternative business lender. I started this business because I wanted to see small businesses succeed. Every business needs capital to grow. But it was obvious to me that larger financial institutions were not up to the challenge. They cannot be flexible enough to meet the needs of small businesses, and they need to make more profit than they can earn from smaller business loans. Besides, the time-consuming application process is a killer for small businesses.
Almost everything about alternative lenders makes us a better choice than credit unions. Consider these points:
It’s one thing to borrow money to purchase real estate. Or remodel. Or make a major equipment investment. These things require large sums of money. You’ll want a traditional loan that gives you years to repay. Your credit union could be just the ticket. You’re looking ahead, so you have plenty of time to apply.
That said, most small business borrowing needs are immediate. Short-term. You don’t have time to wait around. You need money to fix that failing walk-in. Or replace it. To stock up on inventory to meet a big new order. Or staff up to complete a big new job. You need money now. Here at United Capital Source, we get it. You can apply online in three easy steps. Get approved within 24 hours. Get your money within as little as 24-48 hours. Now we’re talking.
OPTIONS THAT MATCH YOUR SPECIFIC NEEDS
Every small business has similar monetary needs. And all small businesses need to borrow working capital at some point. But your priorities and timing are unique to your industry. And your specific business. You need small business loan options that match your needs. Not someone else’s.
Bridget Pollack is VP of Marketing and Communications for the SBA’s SCORE program. She says, “Banks tend not to loan amounts less than $200,000, so alternative financing appeals to small business owners in need of smaller loans. Types of alternative funding include term loans, merchant cash advances, factoring and equipment loans, and you can apply for alternative financing online.”
It’s true that you may pay more for an alternative small business loan. Especially if you have bad credit. But you’re getting the money you need. And on terms you can, in fact, afford. For instance, you can get cash right now by selling your outstanding invoices to a lender. You get most of the value, without having to wait to collect. Or you can borrow against future credit card transactions. Payments ride with sales — more when sales are higher, less when they’re slower. At UCS, we offer five timing options, too.
BAD CREDIT IS NOT A DEAL-KILLER
Making loans is strictly business for banks and credit unions. If your small business is too risky, they aren’t interested. Unfortunately, many small businesses have bad credit. Or less-than-ideal credit. But that doesn’t mean you don’t deserve the small business loan you need to operate. Or expand. Or expand your marketing.
Alternative lenders see opportunity where credit unions and banks see danger. We’re willing to lend you money in non-traditional ways. We offer financing based on your current and future ability to pay. Not your past history. So your credit score isn’t so important. What matters is today. And tomorrow for bad credit business loans.
In a recent article, Entrepreneur noted, “When you’re in the market for business financing, determining what kind of loan you can qualify for is the first step. Most entrepreneurs need to borrow money at some point. The good news is, there are many different loan programs. Unfortunately, that’s also the bad news. In other words, the money’s out there, but it can be confusing to decide which small business loans to apply for, especially because many loans fund specific things.”
There are also multiple sources of alternative loans. For example, your suppliers may be willing to extend credit to you. They might let you pay over 30, 60, or even 90 days. You could investigate crowdfunding to underwrite your next project or product. Or look for an angel investor.
However, worrying about choosing a lender might be putting the cart before the horse. First, you need to be sure you even want a small business loan.
AT UCS, WE CARE ABOUT YOUR FUTURE
Some banks – and probably your credit union – will talk about building financial relationships. But the truth is, making profitable deals is still their priority. Our mission here at United Capital Source is to help small businesses grow and thrive. To learn everything we can about your unique business. Then give you unbiased advice to choose the best small business loan. Our primary concern is your long-term best interest, not the deal on the table today. Because if we aren’t helping you build a strong future, then we aren’t helping you at all.