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In recent years, more and more entrepreneurs turn to alternative lenders for business funding. But as a relatively young industry, there are still a lot of misconceptions. Alternative financing is a valuable source of funding for entrepreneurs, yet it is often misunderstood.
One of the easiest ways to explain how it works is by comparing alternative lending to obtaining a mortgage for your home. If you work with mortgage brokers, they will research different loan options, negotiate on your behalf, do all of the legwork, and coordinate what is needed for your closing. They will make sure you’re presented with several choices for your mortgage, to get the best loan for your needs. Alternative financing brokers give you access to numerous fast and flexible business funding options to choose from. Alternative lenders work quickly and diligently to match businesses with the best financing solutions for their specific industry and needs.
Wondering if alternative financing is a good choice for your business? Not sure if what you’ve heard is accurate? Here are 3 of the biggest myths debunked.
Myth #1: Alternative financing is only for businesses who have bad credit or are desperate.
Your credit score plays a role in determining which products you’re approved for and what the terms of the loan will be. Many small businesses choose alternative financing simply because it’s so much faster and easier than a traditional bank loan.
While we strive to help as many small businesses as possible, there are a few basic requirements to qualify such as a minimum of 6 months in business and $10,000 or more in monthly revenue. These requirements ensure that a business is well-established and able to repay a potential loan. Our standards protect small businesses by making sure they don’t obtain funding that they can’t afford, thereby putting their businesses at risk.
Alternative financing can help you seize a lucrative business opportunity, replace outdated or broken equipment, cover payroll, stock up on inventory, improve cash flow, bid on new projects, or even bridge the gap while you’re waiting on payments from customers.
Whether you have a less-than-perfect credit score, are short on cash, or simply have an urgent need to purchase a new delivery van and time is of the essence, alternative funding can help you secure the funds you need right away.
Myth #2: Alternative lending is expensive.
Ever heard the expression, “time is money”? The same is true in business. If your computer system is down, your restaurant’s oven is broken, or your construction company’s only excavator breaks down, your business can’t operate at full capacity. And every day that you wait for funding to replace your broken equipment, your company is losing money.
Although choosing an alternative lender comes with higher upfront costs than traditional bank loans, securing quick funding to replace equipment that’s crucial to your business’s operations will save you lost revenue. Using alternative funding can help you grow your business and enable you to earn more in the long run.
Myth #3: Business financing brokers are bad news.
While there are always bad eggs in every industry, the majority of business financing brokers are committed to going the “egg-stra” mile (See what we did there?) to helping their clients grow their businesses and achieve their goals.
Brokers are able to:
When choosing an alternative lender, make sure to do your homework and always read reviews. Each one of our team members at SBG Funding is dedicated to the success of our customers and it shows in our reviews. You can read what other small business owners have to say about our team of commercial financing specialists.
We’re here to help!
Since 2017, we’ve helped over 5,000 businesses just like yours secure funding. Reach out today to get your own dedicated funding expert who will help you every step of the way!
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