Should I Apply for Alternative Financing With Good Credit?

Alternative financing has turned the lending market on its side by reinventing the criteria that borrowers must meet in order to qualify for a loan. In doing so, it has empowered countless business owners– who would have otherwise been left without options to grow their businesses!

But as many business owners are coming to realize, there’s more to alternative financing than meets the eye!

Many business owners with great credit scores are starting to opt for alternative financing over traditional bank loans. Doing so cuts out a major source of stress, and will likely lead to a better deal regardless.

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When Banks Think That You Don’t Make the Cut…

Alternative lenders are willing to step in and make a difference!

Alternative finance has made small business loans more accessible to business owners, and not just those with credit difficulties.

In fact, business owners with a bank-qualifying credit score have, for numerous reasons, started to favor alternative financing over traditional channels. 

Credit score can be a factor as alternative lenders evaluate your application, but it will never be the factor they look to in making a final decision. 

Over the years, banks have maintained rigid, strict criteria that caters to larger companies. Even entrepreneurs with an innovative idea and the know-how to make an impact tend to have difficulty landing a bank loan for a number of reasons. 

The same holds true for business owners with pristine credit scores, and all-around glowing financials. But there are a number of other reasons businesses are turning to alternative lenders for all of their financing needs.

No Collateral? No Problem (For Alternative Financers)

Alternative financing makes finding the right source of funding simple, even without collateral.

At National, we offer unsecured loans that provide the financing you need without requiring that you put up personal or business collateral. With competitive rates and terms, you can choose the loan option that works best for your needs.

Having collateral can make or break your chances to be approved for a working capital loan when applying through banks. 

For large corporations with ample resources, finding collateral is never an issue. Most Fortune 500 companies can effortlessly find an office building, stocks, or other assets to put up as collateral.

Apply at Any Stage In Your Business’ Life

Alternative lenders don’t carry the same standards that banks have when it comes to the age of your business. At a minimum, most will look for around 6 months— just long enough to verify that your business can sustain itself on an ongoing basis. 

It’s difficult to say the same for banks.

Before lending to your small business, banks will want a few assurances about its legitimacy and longevity. The age of your business is one of them. 

Most banks will require your business to be, at a minimum, two years old. In addition, you’ll also need to prove that your business has been profitable during these two years.

This leaves profitable 1-year-old businesses with great credit scores to search for other forms of financing.

Apply for a Loan While You’re Paying Back Other Debts

Growing your business invariably takes dedication, team players, and financing. But, sustained growth rarely comes overnight– to make a lasting change in your company, you’ll likely need multiple rounds of financing.

Alternative lenders recognize this, and are willing to look past other debts when evaluating your application.

From a bank’s perspective, you might not make the cut, even if your payment record and credit score demonstrate you’ve kept up-to-date with these payments. Banks can still be reluctant to finance your business loan, at least until you’ve paid back the previous loan, but possibly not even then.

So: your credit score is great and your financials are top-notch. Why test the waters with alternative financing?

You’re Eligible for Larger Loans at Better Rates

Alternative lenders are ready and willing to develop custom terms in order to offer you the amount you applied for. When your credit score is high, you may be eligible for an even larger amount than you initially applied for! 

If you have all of your ducks in a row, then banks might be confident enough to give their stamp of approval– but rarely for the full amount you’re requesting. 

For example, if you applied for a $100,000 loan, then banks might be comfortable with offering only $50,000. The deal will be appealing, but ultimately, the loan probably won’t suffice in the grand scheme of growing your business. When you agree to a less-than-ideal amount, you can make progress–but more than likely, it won’t help you cross the finish line.

You’ll Receive Your Loan Faster

Alternative lenders operate without the same bureaucratic restrictions that limit banks. Because of this, you can apply for, find, and receive funding in less than 24 hours.

Many business owners cringe at the thought of applying for a loan. Among other reasons, the outlandish wait times for bank loan applications are primarily to blame.

Alternative financing is modeled to work in today’s fast-paced world, where even a few days can make a difference. Business owners with great credit scores often choose alternative financing over banks or direct lenders because of the streamlined process. 

Instead of waiting months to learn about your application’s status, a business financing advisor will notify you as developments occur in real time. Thanks to this refined communication process, borrowers can begin implementing a growth strategy right away, rather than waiting for banks to respond.

You’ll Submit Minimal Paperwork

Thanks to alternative financing, borrowers can apply for a loan and submit minimal paperwork/documents in the process. At most, lenders may require bank statements, and never tax returns. For business owners, this means more time to spend managing a growing operation, and less time dedicated to sifting through filing cabinets.

Like never-ending wait periods, many business owners are also discouraged from applying for financing due to the inevitable pile of paperwork that awaits. While all lenders will require a few documents, banks will demand numerous records in order to even consider a loan.

You’ll Customize Your Terms

Alternative lenders have challenged the “set in stone” loan culture banks lived by for decades by constantly communicating with business owners, and learning about their precise needs, throughout the process. As lenders learn more about the borrower’s qualifications, they can adjust the terms of the loan, including:

  • Loan amount
  • Rates
  • Payment terms

When you’re in the midst of a growth period, it’s impossible to know exactly what your expenses will be. Many business owners in this position apply for a business line of credit, which allows you to gradually withdraw money as you need it. Once you repay the amount you’ve withdrawn, you can access that money again.

Potential loan offers from banks rarely provide any flexibility for business owners. The offer that you receive– if the bank chooses to extend one– is the offer you must accept, or reject. 

Learn Your Good Credit Alternative Finance Options Today

You’re a phone call or a few clicks away from starting the process! Give us a call at (888) 488-GROW or fill out our application online, and a business financing advisor will touch base with you to learn more about what you’re looking for!

National Business Capital & Services is the #1 FinTech marketplace offering small business loans and services. Harnessing the power of smart technology and even smarter people, we’ve streamlined the approval process to secure over $1 billion in financing for small business owners to date.

Our expert Business Financing Advisors work within our 75+ Lender Marketplace in real time to give you easy access to the best low-interest SBA loans, short and long-term loans and business lines of credit, as well as a full suite of revenue-driving business services.

We strengthen local communities one small business loan at a time. For every deal we fund, we donate 10 meals to Feeding America!

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About the Author, Matt Carrigan

Matt Carrigan is the Content Writer at National Business Capital & Services. He loves spending every day creating content to educate business owners across every industry about business growth strategies, and how they can access the funding they need!


Disclaimer: The information and insights in this article are provided for informational purposes only, and do not constitute financial, legal, tax, business or personal advise from National Business Capital & Services and the author. Do no rely on this information as advice and please consult with your financial advisor, accountant and/or attorney before making any decisions. If you rely solely in this information it is at your own risk. The information is true and accurate to the best of our knowledge, but there maybe errors, omissions, or mistakes.