Alternative Business Loans Gains Momentum

(Newswire.net — December 3, 2014) Jonesboro, Georgia — Alternative business loans sources are steadily gaining market share, as typical lending institutions continue to restrict funding capital to small businesses. These emerging sources are able to assist small business owners get capital that they may not otherwise have access to through other means. As a direct cause of the recession of 2008, traditional banks became ultra conservative in their lending practices to small businesses. This left small businesses with little access to capital from traditional banking sources.

According to an Intuit QuickBooks’ article, “only 39 percent of applicants received all of the cash they asked for when applying for a business loan.”  Pepperdine University states that only 17% of businesses get the capital they are seeking from banks.What neither of these reports address is the size of the company applying.  I would argue that the small businesses doing between $200K to $10M a year in annual revenue have far less success than the numbers reported.  Couple that with the fact that virtually all of the companies that have less than 2 years in business have little to no chance of even getting a complimentary toaster oven! (Are you old enough to remember when banks gave away toaster ovens or blenders?)

 Big bank lending requirements have become more stringent due to the recent economic crisis, and this may continue for years to come. Business owners are typically subjected to lengthy business loan processes, which includes determining factors such as personal credit reports, collateral, and bank statements. Also, the type of business has a bearing on what amount of money, if any, the bank will be willing to lend. Even if a business owner qualifies, the banks usually restrict the way that funds could be used. Although bankers reported lowering business loan requirements to some degree last year, small businesses still struggle to obtain business loans. Larger businesses have seen some success in getting help from the banks recently, but small business owners have often had to look elsewhere for access to capital.

 

This has increased the number of small businesses in an unserved business loan market. In addition to what some refer to as the “3 f’s”, friends, family, and fools, secondary lenders are entering the marketplace to serve the demand of business owners in need of funding. Typically, these alternative business loan sources charge slightly higher interest rates than traditional lenders. However, business owners are attracted to these sources because their lending requirements are a lot less burdensome than the big banks. A lack of collateral and bad credit are not necessarily deal breakers for businesses that choose to apply for funding from the emerging, new business loan sources. In addition, the business owner can obtain the needed funds in a matter of days, as opposed to a matter of weeks or months using a traditional lender.

Increase Fundings,(increasefundings.us) offers flexible payment options for small business loan customers. Loan consultants boast because they do not operate under all the same regulations that the banks operate, they are able to build mutually benficial relationships with business owners by giving them what the need, money.