Small businesses seek alternative loans
Businesses are turning to alternative loans for easier access to the funds they need to expand or improve.
Right now, things look good for both Wall Street and Main Street. The vast majority of small business owners are satisfied or optimistic about the future of their work, and more than half are growing, according to the Reliant Funding Small Business Report November 2017.
This means small businesses are ready to invest in their operations. Although their financing may not match Amazon’s promised $5 billion investment in a second headquarters, the cumulative effect is bound to make waves. The study found that more business owners will spend money in the next six months on marketing initiatives (18%) or new products and inventory (18%) than on technology (16%) or new employees (10%).
Yet despite such great opportunities to expand and improve, a large proportion of small business owners (39%) aren’t even aware of the alternative finance services that are available to them.
Among those who know alternatives exist, only a small number (12%) have taken advantage of their options. They do so for a number of reasons. For example, traditional loans can often take a long time to process and alternatives may offer better options for poor credit. Additionally, some business owners say the application process at a bank can be unpleasant or that their loan requests were denied by traditional lenders. However, banks have recently begun adjusting their standards to make it easier for businesses to take out loans.
To get the best odds of being approved for a business loan, consider applying for credit at an institutional lender or alternative lender. According to the Biz2Credit Small Business Lending Index, institutional lenders lead all others’ approval rates at 64% of all applications, and that’s currently at a record high. The only other type that approves the majority of applicants is alternative lenders (56.8%). Approvals are more difficult at small banks (48.9%), credit unions (40.2%) and big banks (25%).
From credit cards to business loans, merchant cash advances to unsecured cash loans, there are all kinds of ways to secure the finances you may need to keep your business running smoothly into the future.
Learn more about the landscape of business credit, including what’s required to take out a business loan, how they work and how interest rates and fees compare among providers using our guide to small business loans.