Even though bank loans typically have lower interest rates than alternative lender loans, there are major benefits and quite a few scenarios where an alternative lender loan is the right choice for your small business.
If you have invoices or equipment that you can put up as collateral, you could get a lower interest rate with an alternative lender because they are more likely to work with your situation to get your business the money you need. Banks are typically less lenient and require very strong financials, coupled with a blanket lien on all your business’s assets.
Bank loans take a long time to fill out their application, wait for approval, and then wait for funding. If you’re in a pinch and need money for your business now (for example, if you’re trying to prep your inventory for the holiday season), alternative lenders have much faster application processes and quicker turnaround times than a typical bank loan. For example, Harbour Capital has a $250,000 application-only program for franchisees, where a one-page application can have you financing in less than 48 hours.
Less Favorable Credit
Banks are much stricter when choosing who to lend money to. Even if you have stellar credit and incredible payment history, one judgement on your credit report could result in you being denied by a traditional bank. This is where alternative lenders come in key. Alternative lenders, as I mentioned before, are more likely to work with you in your situation to help you out as much as possible. There may be some compromises, like taking a little less of a loan or putting some equipment up as collateral, but at the end of the day, alternative lenders want to help your business grow. If you are denied by a bank, or want to have a better chance from the start of getting a loan for your business, looking to an alternative lender like Harbour Capital can be a lucrative