You finally have it, a moment of brilliance when you wake up in the middle of the night and can’t find a pen and paper fast enough to write down the idea that’s going to change the world. You’re excited and ready to take on the challenge because you believe your business will be a success. Great! But where do you start?
The first logical step for most of us (unless you’re lucky enough to have the winning lotto ticket) is to go through the pleasant task of getting a small business loan. In the world of business however, it can often feel like you’re the only optimist among a flurry of cold-hearted pessimists who just can’t seem to understand your vision.
These days there are multiple options to look at when taking out a loan. You don’t have to be stuck with a traditional bank but rather explore alternative lending options for small businesses. However, both will have pros and cons to consider in order to make the best decision according to the needs of your business. So, let’s take a look at traditional and non-traditional lenders’ defining factors so that you can get your business up and running!
Traditional Bank Loans
Banks are notoriously known to have tightened the screws on the loan approvals, especially for small businesses. They often have ridiculous requirements which nearly no business owner can meet. These terms and conditions are often stringent and expect perfect credit scores and detailed business plans through a never-ending list of documentation.
Traditional banks have added substantial suspensions to the underwriting process, this basically means that getting your loan approved and received will take even longer even after you meet the basic requirements. These delays mean that if you’re in need of quick cash, traditional banks just aren’t an option.
If you can manage to look past all this, banks actually do have some advantages in that they do offer much lower interest rates and better terms than other types of lenders. So, bearing this in mind, if you think you could qualify for a bank loan and are in no real rush to get the loan approved, it’s certainly an option worth seriously considering.
Alternative or online lenders, such as Merchant Money, are changing the small business world, one unsecured loan a time. Of course, you need to do your research but it is a fantastic option for entrepreneurs with fledgling businesses along with those which may not meet the requirements laid down by banks.
The application process is a lot simpler as it virtually all happens online, which means you can have your loan approved in just a few days! These lenders are also more accommodating when it comes to your personal credit history and tend to focus more on you as a person and the type of business owner their customers are.
One must remember that these lenders are taking bigger risks with regards to backing their customers so interest rates are often higher and that is something to keep in mind.
Online lenders also are not as regulated as traditional banks are so they are required to self-regulate. This means that you must do your homework and research in order to avoid any malicious lending businesses online and you can find the best lending situation for your business.