Alternative lending is a concept that is often misunderstood. When you run your own business, it’s important to have a clear understanding of what it is. The best way to achieve this is to be aware of some of the most common alternative lending misconceptions.
Alternative Lending Is For Those Denied A Bank Loan
Though some people believe that alternative ways of securing a loan are simply the last resort of businesses that couldn’t get a bank loan, this isn’t actually true. There are business owners that simply prefer the terms and flexibility that other types of lenders offer. One of the reasons for this is that to get a bank loan, some businesses may have to offer collateral. This is a huge risk that not every business in need of a loan is willing or able to take.
Businesses Turn To Alternative Lending Because They’re Desperate
There are too many reasons why a bank might turn down a business owner for a loan. Qualifying for alternative lending is usually much easier. These types of lenders will decide how much of a risk loaning to your business is. The higher they feel the risk is, the higher the interest rate you’ll likely pay. Even if your business credit isn’t great, you may still qualify for this type of loan. These lenders are committed to helping you grow your business and will do their best to offer you a loan you can handle the terms of.
Alternative Lending Hurts Your Business Credit Score
Seeking alternative lending not only isn’t likely to hurt your business credit score, but it may help increase it. When you obtain a loan this way and you pay it back on time and in full, you’ll likely see your business credit score go up. Everything is done through your business, so your personal finances and credit score aren’t even considered.
Alternative Loans Aren’t Regulated
While bank loans are regulated, alternative loans aren’t. As long as you honestly disclose the information needed, you are likely to be approved for a loan.
For more information on alternative loans, please contact Capital Funding.