Acquiring working capital for your small business would be as simple as asking and getting, but it is important to remember that the lenders don’t simply offer cash to just anyone because they are taking on risk by providing lending to small businesses. And that is why lenders will examine certain criteria to determine if the loan is too risky or not.
At the very least, these criteria will influence the parameters of the loan – amount, term length, interest rates, and so on. By knowing and understanding what the lenders are looking at in your loan request, you can make yourself an attractive borrowing candidate for your lender.
Traditional Lending Criteria
What standards take priority can differ from lender to lender, however there are a couple of elements that all traditional lenders will follow. These standards consist of:
- Cash flow
If the amount is higher, the lender will definitely take on more risk. In the interim, a negative credit history could imply a borrower who may be unable to make loan repayments, further increasing the risk. Limited cash flow would support this perspective, and a loss of collateral to cover a loan default frequently acts as the death warrant of small business owners looking for a small business loan.
But, the days of depending on traditional funding sources for small business loans are over. In today’s market, small business borrowers have more funding options than ever and that is just because of alternative lenders.
Advantages of Alternative Borrowing
Alternative lenders features business models that differ from traditional banks and credit unions. This makes it possible for them to offer loans to small business owners who may otherwise not make the grade.
And in contrast to traditional lenders such as banks and credit unions, alternative lenders does not require small business borrowers to place their personal assets as collateral, since all the alternative lending is unsecured.
In conjunction with simple, straightforward application, adjustable repayment terms and the ability to get cash in as little as one day, the advantages of business financing from an alternative lender are immense.
Customized Business Solutions for SMEs
No matter what type of lender you apply at, the most crucial element is working with experts who understand your precise requirements as a small business owner.
Minimum documentation, quick turnaround, and flexible repayment options are all important within the small business market. You be obligated to yourself and your small business to borrow from a lender who understands and supports this.