Small Business Loans from Alternative and Institutional Lenders

Even while new forms of finance are on the rise, small business still struggles to find capital necessary to fund growth. Studies show that small business access to traditional bank loans is slowly rising, small businesses still lag behind middle market companies and this wrinkle pushes them to rely on alternative sources. Here are a couple of options that small businesses can leverage and some tip on how to pursue this funding source.

To qualify for a loan or small business line of credit, it’s always advisable to know the right way to go about it. While it is true that your chances of getting approved by an institutional or alternative lender are greater than big banks, it’s important to make note of a few things to ensure you qualify. To begin with, you should know that unlike traditional lenders, alternative and institutional lenders are more likely to depend on technology to determine whether or not you can repay the loan amount. They use sophisticated software tools and data metrics, including social media interactions to assess businesses.

If you have just started out, you probably won’t qualify for a big loan. Conversely, if your business is up and running and you can show a good track record of revenue performance, you will find it easier to secure funds. What’s worth noting is that you need a good business plan in place to increase your chances of qualifying for a loan. It’s also advisable to know which lender is your best option before you approach them. There are many lenders who specialize in real estate businesses, purchase order financing and other kinds of small business loans. Leveraging the services of a good loan consultant can help. An experienced firm that deals with small businesses and their funding needs is already in a good position to know the lenders to contact and can guide you through the process.

It goes without saying that it’s important to maintain a good credit score because most alternative and institutional lenders carry out credit checks to ascertain a customer’s credit worthiness.

Armed with enough information and insight, you can easily secure funds without borrowing from your IRA or approaching big banks.