This is a problem all too common for business owners these days. Following the Recession of 2008, government regulations forced banks and other lenders to significantly tighten their requirements, effectively shutting out many businesses from funding.
So what can franchisees do to get the funding they want? The answer lies within alternative lending.
Since the financial crisis, alternative lending companies have begun to take the place of more traditional lending options. While you may struggle to meet the requirements for a bank loan, it’s a different story with alternative lending. Issues commonly affecting business owners for bank loans—such as credit score and collateral—do not factor in to the alternative lending process.
Let’s take a look at common issues that arise during for business owners and how alternative lending alleviates them:
Poor credit: Ah…the dreaded credit score. Normally, a bank will show you the door if your credit rating isn’t hovering around at least 700. But this isn’t the case with alternative lending. Alternative lenders generally do not take personal credit history into account during the process.
Insufficient collateral: Banks will always want some form of collateral when lending money. Usually, the collateral will be tied to property, such as a mortgage. But contrary to a bank loan, collateral is not a necessary component to being eligible for alternative lending.
Application Time: When applying for a bank loan, there’s no telling when you will get approved for funding, if ever. A major benefit of alternative lending is that you can find out whether or not you’re approved almost instantly. Many alternative lenders have embraced online applications that can approve business owners for funding in seconds.
Getting the money: Expansion, renovations, advertising, marketing…the list goes on and on of the immediate needs your business is facing. The bank loan process is notorious for being dragged out and old fashioned and alternative lenders aim to get business owners money as soon as possible. Similarly to the quick application process, actually getting the money in your account happens very quickly. Often, you can receive the money in less than a week.
Look no further than alternative lending if you’re franchise could use some extra cash flow to boost business this summer. Approval rates high, funding is quick, and the process is much simpler than going to a bank. If you’re worried about your credit score or collateral affecting your eligibility for a bank loan, alternative lending may be for you.
This article was originally published by Amerimerchant