Growth is vital for sustaining a small business, but funding that growth is a common challenge for many business owners. Alternative funding is becoming more popular and positioning itself closer to the forefront of the lending industry. It is understandable that some business owners are apprehensive about borrowing from a non-traditional lender, but there are many great reasons to consider alternative funding to fuel small business growth.
Difficulty Obtaining a Bank Loan
It seems like we’re stating the obvious, but it needs to be said. Even though there has been some improvement, traditional bank loan approval rates have been low ever since the crash of 2008, especially when it comes to smaller loans. Banks are looking to grant larger, more profitable business loans and typically don’t approve loans of less than $250,000. Alternative funding companies and online lenders stepped in and continue to fill the gap left behind by traditional lending institutions.
The Capital You Need – When You Need It
Time is money and timing is everything – both these old adages still hold true today. Often when assessing the options for raising enough capital to fuel small business growth, business owners are only looking at the interest rates. While bank loan interest rates are typically lower, the wait time to receive a determination can be costly.
On average it can take anywhere from 30 to 60 days to go from the application process to actually receive funding if approved for a bank loan. That’s time a business owner could be generating sales and focusing on business growth. They may also be looking to take on more work or add a new location and don’t have time to wait for a traditional bank loan. Holding out for a lower interest rate can also result in a lost opportunity.
Depending on the type of funding needed for small business growth, an alternative funding company can get you the capital you need much faster. Approval can take anywhere from 2 to 10 business days with actual funding provided within 24 to 48 hours.
Multiple Funding Options
Every business is unique and the perfect funding solution for one business might not be right for another. Alternative funding companies and online lenders typically offer a variety of different options. The options can vary from lender to lender, but merchant cash advances, purchase order funding, invoice factoring, and equipment financing are among some of the most popular and beneficial options for small business growth.
A merchant cash advance can provide quick capital for businesses that receive most of their revenue via credit card sales. Repayment is easy with a previously agreed upon percentage of credit card transactions automatically deducted from daily sales. Purchase order funding and invoice factoring let businesses leverage funds from purchase orders not yet filled and invoices yet to be collected. This provides the capital needed to keep up with increasing demand and other business expenses without letting an order go unfulfilled or waiting for an invoice to be paid. Equipment financing allows a business to get the equipment required for growth without having to shoulder the upfront cost all at once.
Less Than Perfect Credit
A small business with a black mark on their credit history stands little chance of getting a traditional bank loan. Alternative lenders go beyond the credit score when assessing the creditworthiness of a business. They use a different set of criteria including Fintech to make a determination which results in a higher rate of approvals. Because of this, alternative funding companies and online lenders are growing rapidly. Most of these companies are direct lenders, geared towards small to midsize businesses. They provide small business funding without intermediaries or middlemen such as private equity firms, brokers or investment banks.
Jump Start Small Business Growth
At CFG Merchant Solutions, we can help your business grow faster with a variety of small business funding options. Whether it’s a merchant cash advance, invoice factoring or any of our other funding options, we will guide you in choosing the perfect solution for your individual business needs. Our team brings to the table more than 60 years of institutional investment banking experience in the credit, commercial finance, and capital markets.
We are a privately-owned and operated specialty finance and alternative funding platform. We focus on providing capital access to small and mid-sized businesses (Merchants) in the U.S. that have historically been underserved by traditional financial institutions and may have experienced challenges obtaining timely financing. Contact us or apply online today!