Getting the funding your business needs can be extremely challenging. In fact, it becomes downright impossible if you’re looking in the wrong places.
While banks are loosening their lending standards to some degree, it’s still very difficult for all but the most creditworthy Small Businesses to get financing. Why is this? After all, banks need to lend capital in order to make a profit, don’t they?
Here are a few reasons why your next business loan most likely won’t come from the bank:
- The Fed wants to prevent a repeat of the mortgage crisis. Banks were making an excess of high-risk loans in the years leading up to the collapse of home values. Afterwards, the Fed incented banks to make less risky loans, and part of the collateral damage was that small business lending standards tightened up too.
- The alternative lending market is growing. This is happening primarily because alternative loans are faster and easier to get. Many companies can close them in just a few days, whereas traditional bank loans can take weeks or longer before the funds are finally received.
- Your business doesn’t have a good credit rating. Banks, and many other lenders, want to see that you have a very good credit score (680+) before they do any work with you. If you don’t have a good credit score, it’s very unlikely any bank will take a close look at lending your business the capital it needs.
- You need a constant source of capital. Banks don’t always act as a source of renewable capital. In fact, they want to reduce their risk as much as possible. The more they lend you, the higher their risk. Alternative lenders love to give you multiple loans, and especially so if you consistently pay on time.
- You don’t have a good source of business collateral. Banks don’t always require a high amount of collateral, but they often do. Even if they don’t, they’ll often have you sign a personal guarantee, which forces you to pledge a personal asset, like your home, that can be used as collateral instead.
Reliant Funding offers loans to small businesses who meet 3 simple criteria:
- Must have been operating for at least 12 months
- $10,000 in revenue must be generated each month
- No bankruptcies may be open
Learn more about our small business loans contact us today.