What are Alternative Small Business Loans
Alternative Small Business Loans – The Importance of Transparency
Triad Business Capital wants you, the small business owner, to understand exactly what type of funding we can secure for you. We are teamed up with over 60 lenders in the Alternative Lending space who focus on providing alternative small business loans. These are private “banks” that provide alternative small business loans to those businesses that cannot secure funds through a traditional bank or do not wish to wait for a bank approval. You can use this capital for whatever reason including inventory purchases, expansion, new hires, pay taxes, training programs for employees, seasonal reasons or for general working capital needs.
Lenders providing alternative small business loans require much less documentation than a traditional bank. The minimum requirements include providing a completed application, most recent 3-6 months of bank statements, most recent 3-4 months of processing statements, a valid photo ID, copy of a lease or mortgage statement (if home based business), your landlords contact details, and a voided check. At times, lenders may also request a tax return or P/L statement (usually dependent on size of funding).
Funding amounts range from $2500 to $500,000. The average size of alternative small business loans is currently $40,000 but this too is dependent on many factors including revenue and cash flows. The majority of fundings are less than $20,000.
What Alternative Lenders Will Not Do:
These alternative lenders provide high risk “loans” to businesses considered high risk by bank standards in less than 7 days. They will not over extend a small business owner with payments they cannot afford. Their intent is to provide a “bridge” of capital for the short term until your business can become “bankable.” They know they are providing short term business capital for short term working capital needs. It is imperative that the business owner knows what they can afford based on their own cash flows. The alternative lenders have smart and efficient underwriting that enables them to properly determine what you can afford based on their own data.
Alternative business lenders/banks will always run both your personal credit and business credit. While having a high personal credit score is not required, personal credit does affect your rate (or cost of borrowing). Personal credit scores below 500 may experience some difficulty in securing alternative business capital but keep in mind a lot of weight is given to your business cash flows and monthly revenues. Strong business bank accounts with solid average daily balances mean much more than a personal credit score.