Financing is a critical ingredient to a successful small business. In order to thrive in today’s competitive and saturated markets, these companies rely on loans to grow and expand — whether it comes to inventory, equipment, cash flow, or employees.
There are a variety of finance options available to these business owners, from lenders to various loan programs. When looking for a small business lender, it’s important to focus on key incentives, suggests Danielle Rivelli, Sales Manager at United Capital Source. The unsecured lender industry offers several incentives. They are:
1. Turnaround Time: Bank loans often require lots of paperwork and therefore can be a long process. Unsecured lenders offer flexibility (through adjustable programs where merchants have the option to reduce or increase their payment depending on their monthly revenue) and minimal paperwork.
“If you sign paperwork, within 48 hours you should be funded,” says Rivelli. “When it starts to drag on that means there is hair on the deal or it’s just not going as smoothly as it should be.”
2. Pre-Payment Options: This is a huge benefit, as it allows merchants the opportunity to pay the loan off early for a discount.
3. Paid-in Options: Most unsecured lenders can offer businesses paid-in options, which allow merchants that can’t initially support a full payment structure to take the full loan up front with a percentage paid in.
4. Revenue Driven: The whole idea behind unsecured financing is it allows lenders to not necessarily focus on the principal owner himself.
Fun Fact: Donald Trump-related businesses have filed for corporate bankruptcy four times since 1991, yet his net worth is still in the billions (in excess of $10 billion according to Trump).
Many merchants get into financial trouble when the business is profitable but overextended and therefore without the credit to get money from a traditional bank. Unsecured lenders are able to redirect and focus on what the business is doing rather than who the owner is of the business. Of course, if the owner has criminal filings or very poor credit, or if the owner is in bankruptcy, those scenarios are going to effect the situation. However, revenue driven programs focus on FICO score and time in business and lenders in this industry generally have the capability of lending 100-125% of a monthly revenue. This is without any pre-payment or paid-in options.