Most business owners understand that they need funding to sustain the continued growth of their businesses. However, many new or smaller businesses lack the necessary credentials needed to obtain a conventional loan. As a result, alternative lending has become a resource for many businesses that can obtain conventional loans. Conventional loans often have lower interest rates and longer terms. However, these loans often lack the flexibility that some business owners may need and may also have strict terms.
What is an Alternative Loan?
The definition of an alternative loan is actually quite literal. An alternative loan is a loan that’s not provided by a traditional bank or lender. These loans operate as an alternative to traditional loans and are directed toward people who may not qualify for traditional loans. Many alternative lenders are online lenders. Also, these loans often have less stringent terms and are easier to obtain than conventional loans. These loans may also be offered in smaller amounts, usually less than $250K. However, these loans may have shorter terms, higher interest rates, or other requirements that differ from conventional loans. Alternative loans often take the form of direct private lending, crowdfunding opportunities, short-term loans, and microloans.
Various Forms of Alternative Lending
Alternative lending has many forms. These forms of lending can include equipment financing, factoring, merchant cash advances, and bridge loans. Sometimes, a business owner is better off financing a piece of equipment rather than purchasing it outright. Often, this is a way of holding onto more of your money. If the interest rate is low enough, financing may be a smarter option and has the ability to keep much-needed capital in the pockets of your business. Merchant cash advances allow business owners to gain access to a lump sum of money and pay it off in increments in the form of a business’s sales. This is another form of alternative leading that allows business owners to obtain the capital they need without using a traditional lender. Business owners have a myriad of unique options when it comes to alternative lending.
Contact Progressive Capital Funding today to explore our wide range of alternative financing solutions.