According to the 2017 State of Women-Owned Businesses report, female-owned businesses grew 2.5 times faster than the national average. Specifically, the report estimated that as of January 2017, the total number of female-owned businesses in the U.S. equaled approximately 11.6 million firms. Those firms generated over $1.7 trillion in revenues.
Considering those impressive facts about the growth and significance of women-owned businesses, you might be surprised that there is a rapidly growing gap in women-owned business funding. For example, in March 2018, CNBC reported that the average loan amount for women-owned business fell from $99,000 in 2016 to $57,097 in 2017, which is nearly half the $103,604 average loan amount funded to male-owned businesses. Clearly, this is neither a good nor healthy traditional financing trend for women-owned businesses.
Fortunately, women-owned businesses no longer need to rely solely on traditional small business lending to secure the financing they need to grow and prosper. Reliant Funding is a key player in the rapidly growing industry of alternative financing.
What is alternative financing?
Alternative financing is a broad term that describes the variety of nontraditional financing sources that are available to business owners. In other words, alternative financing is not the same as traditional small business lending that you would find at a bank. Specifically, as it relates to women-owned businesses, alternative financing sources can be a great source of capital, depending on your situation, to your business growth.
What does “depending on your situation” mean?
Traditional bank financing, such as SBA loans, USDA loans, commercial lines of credit, et cetera, are viable financing options for you … circumstances permitting. We also know that alternative financing, such as private equity firms, hedge funds, private investors, grants and angel investors, are viable financing options for you when your needs and circumstances fit the type of funding that Reliant Funding provides.
Differences between traditional bank lending and alternative financing
Traditional bank lending usually takes a long time.Obtaining SBA loans from a bank can take as long as a year to be approved and funded. Traditional banking also has strict loan approval requirements and required documentation. Banks are not charities. Therefore, banks only lend money to borrowers whom the bank deems to be technically worthy of the loan. For instance, borrowers who pursue an SBA 7(a) loan from a traditional bank must provide:
- Three years of business tax returns.
- Three years of personal tax returns.
- A formal business plan.
- Three years of monthly their business’s cash flow projections.
- A good credit score.
- Enough collateral to fully collateralize the loan.
Unfortunately, this perspective often means that banks deny a potential SBA borrower of the SBA funds that they have applied for after subjecting that borrower to months and months of delays and frustration.
Alternative financing, on the other hand, is fast and efficient. You can get financing in as little as 48 hours as long as you meet the basic application requirements. It also has much less red tape to get approved; alternative financing usually does not require you to have a high credit score.
Reliant funding provides alternative financing to customers who need money quickly to take advantage of an urgent business opportunity and who don’t mind paying a higher rate to avoid the inevitable delays that they would experience at a traditional bank. The company’s alternative financing solutions are not for everyone. If your business is contemplating a new opportunity and might need money right away, then contact the financing experts. Reliant Funding can help you determine which alternative financing solution is a good fit for you.