To effectively run a small business, business owners need a steady source of capital and revenue to cover daily expenses and operations costs. While traditional bank lending is often the first avenue a business owner explores, there are plenty of alternative lending solutions available as well.
In many cases, traditional bank lending is limiting or just inaccessible for businesses. But there is a wider variety of lending options available than most business owners realize!
Let CAB Capital introduce you to these options and help you find the solution that’s the right fit for your financial needs:
What is bank lending?
Bank loans come from traditional large banking institutions. Though bank loans come with heftier requirements and regulations, they are generally a safe solution for businesses that have the credentials to qualify.
But qualifying has become increasingly difficult in the last decade. As a result of the Great Recession in the mid-2000s, the requirements to qualify for these bank loans have become increasingly strict, often demanding qualifications that many small businesses can’t meet.
Through this increasing need for funding options for small businesses, alternative lending has become another viable solution.
What is alternative lending?
Alternative lending, on the other hand, is any form of lending outside of traditional banking. Designed to provide more options for business owners and promote healthy economic growth, alternative loans are an attractive solution because they are more quickly obtained and available to businesses that may not have the financial requirements banks require.
Benefits of alternative lending over bank lending
Alternative lending solutions provide billions of dollars to small businesses each year and continue to grow in popularity. It’s easy to see why, with so many benefits to this style of lending:
Easier, faster approval
Alternative loans are much likelier to be accepted than traditional bank loans. According to Biz2Credit research for 2021, 24.3% of alternative loans are approved, compared to big bank loan approval rates of around 14%. Due to this increased chance of loan approval, demand for alternative lending solutions is expected to rise as businesses bounce back from COVID-19.
Alternative lenders are often faster at approving and providing loans as well. Where banks can take months to approve an application, alternative lenders can act as quickly as days later.
Less paperwork and requirements
Alternative lending options are often a preferred choice because there is less documentation and paperwork involved upfront, while banks are immovable in the numerous forms of paperwork they require just to apply for a loan.
Banks often require your business plan, personal and business tax returns, financial statements, and both personal and bank statements. Alternative lenders may not all have the same requirements, but typically need business bank statements and a funding request form.
While many bank loans require a credit score of 675 or higher, alternative loans often allow a minimum score of 500 and are more willing to work with businesses in good health. Banks may also require a business to be a certain number of years old, where alternative lenders are more likely to look at your business success as a whole.
Big bank loans are often inflexible because banks have stricter requirements. Alternative loans can be more flexible to your needs depending on the lender you choose. This puts more power into the business owner’s hands, allowing them to find a source of capital that works for their business and helps them comfortably and accessibly meet their needs.
More loan options to choose from
There are numerous types of alternative lending solutions for small business owners in any industry. At CAB Capital, we provide a variety of financing options:
For business financing, there are options for:
- Asset-based financing
- Cash flow financing
- Equipment financing
- Account receivable financing
- Debt restructuring
For commercial financing, there are options for:
- SBA loans
- Real estate purchases
- Renovations, rehabilitations, and buildouts
- Real estate expansions
- Real estate refinancing
CAB Capital can also provide specialty financing services based on your individual needs.
Schedule a Consultation with CAB Capital
Need more working capital? CAB Capital helps small businesses meet their goals by finding alternative lending solutions that are flexible to your specific business needs. Reach out today for a consultation.