Small business owners in nearly every industry often face a similar financial challenge – they have trouble finding access to unsecured business loans and other forms of working capital funding. For ages, banks have served as the primary outlet to obtain financing. However, the lending market has seen a significant shift from traditional lenders to more efficient non-bank finance companies providing alternative business lending. An alternative lender provides loans, lines of credit, or cash advances to small businesses, outside of the traditional forms of credit offered by a bank, credit union, or the Small Business Administration (SBA).
Alternative lending is a way for businesses to borrow money without going through a traditional financial institution. Instead of applying for a loan with a bank, business borrowers apply for financing through online lenders, without having to visit a physical location. According to the SBA, nearly 75 percent of small businesses seek financing within a typical year.
But as many small business owners can attest, obtaining a loan from a traditional bank isn’t always easy. Aside from the magnitude of paperwork required to apply, small business owners often lack the business history, healthy FICO score, and positive cash flow needed for approval. And since the 2008 banking crisis that resulted in the Great Recession, banks have grown even more restrictive with their lending practices for fear of yet another economic downturn. In fact, according to the Federal Reserve Bank of New York’s Small Business Credit Survey, large financial institutions have an average loan approval rating that ranges between just 13 and 20 percent.
To make matters even more challenging, banks are reluctant to loosen loan terms for small businesses and often consider small business loans too risky, favoring large businesses instead. A study from Harvard Business School found that since the recession, loans have increased 4 percent for large businesses but decreased 20 percent for small businesses. Luckily, alternative lending has begun to change the way businesses access working capital. As a result, small and medium-sized businesses that may not have qualified for a bank loan now have a way to get the capital they need.
Small businesses didn’t have many lending options beyond traditional banks and credit unions. Those financial institutions typically had tight lending restrictions that only tightened further in the aftermath of the 2008 recession. Enter alternative lenders – companies that figured out how to create lending products tailored to the needs of small businesses. Today, alternative business lending is one of the most common ways entrepreneurs obtain the funds to start a successful restaurant business, manufacture products, or cover expenses for their service based company.
Despite its sudden popularity and significant role in the business financing industry, alternative lending is still considered a relatively new phenomenon. So what is alternative lending? How does it work? What is the difference between alternative business lending and traditional lending? If you’re wondering the answer to any of these questions, you’re not alone. QuickBridge is here to help.
An increasing number of small business owners have discovered that alternative lenders are the best choice for their business. According to the Federal Reserve, small business owners are two times more likely to apply with an online lender than large firms. In 2014, for example, more than $8.5 billion was financed via online lenders, according to the SBA. That’s more than all the previous years combined.
But why? Here are a handful of reasons alternative lending is the new preferred option for small business owners:
• Easier approval – Alternative lenders’ average approval rating ranges between 61 percent and 64 percent, compared to 13 percent to 20 percent for big banks.
• Faster approval window – Instead of wait times lasting months, online lenders have approval times that are much shorter – often within 24 hours or less.
• Enhanced flexibility – Alternative lenders can offer different loan terms and repayment options than banks.
• Various loan types – From term loans to a line of credit and merchant cash advances to invoice factoring, online lenders have a litany of financing solutions that big banks lack.
• Less paperwork – Alternative lenders typically require less financial documents and business information from small business owners.
With so many alternative lenders now in the marketplace, it’s important to choose the right online lender for your business’s needs. At QuickBridge, we don’t just provide funding. We offer financing options that make for a better, smarter small business loan. With QuickBridge, small business owners get a straightforward application process with minimal paperwork, fast decisions, and funds in as little as 24 hours if you are approved. And if you have a less-than-perfect credit score or you just recently established your business, we will give you an honest look and do our best to help your business.
Plus, there are no hidden fees. We pride ourselves on exceptional customer service and honesty. We make sure you’re aware of the terms and conditions of the loan because you deserve transparency and expediency. It’s part of our patented Smarter Funding commitment.
How do we know our system works? From the success of the small business owners we serve. In fact, nearly 85 percent of our repeat customers have experienced higher revenues after taking a loan provided by QuickBridge.
At QuickBridge, you can trust our services are as good as our name – providing you with the financial “bridge” you need to succeed at the time you need it.