Top Reasons to Apply for Alternative Financing Instead of Bank Loans

At traditional banks, small business loans are difficult to obtain. The down economy of recent years has tightened credit and extended application timelines. According to the Wall Street Journal, banks’ decline rates are about 80% and this statistic has caused many companies to look elsewhere for their business financing.

Over the past decade, alternative financing companies have become more prominent. These companies assist businesses obtain financing through new sources of capital.
According to a review of this industry by Goldman Sachs report, “shadow banks” are defined as lenders operating outside the banking system. These new technology-driven lenders, the report predicted, are now providing billions to small businesses.

That means that business owners are turning to these newly funding sources, having successful experiences, and returning whenever their enterprises require an infusion of cash. These lenders aren’t just replicating bank financing application processes. Alternative financing industry leaders such as National Business Capital are utilizing newer, faster ways to process and approve loans which makes the financing experience far simpler for business owners.

Four Reasons to Apply for Alternative Financing:

1. Annual Business Revenue Under $10 Million

Banks almost seem to never consider small business financing for businesses with revenue under $10 million to be economically viable. They consider such loans to be a greater risks and these also yield far less profit for said banks. Starting with the 2008 financial crisis, banks have reduced their small business lending to focus on extending credit to larger businesses which yield higher profit.

2. No Need for Extensive Documentation and Paperwork.

The bank financing application process involves gathering and submitting documentation, then waiting to hear if the application has been accepted. The process can take months; that’s time that business owners do not have.

3. Fast Decisions and Fast Access to Capital

Most alternative lenders will use technology and financing criteria beyond a business owner’s credit score to make their decisions. That means that the technology can more precisely determine whether a business is capable of repaying a loan. These criteria equal more accepted applications for financing. Another advantage to this vastly improved underwriting system is the ability for alternative financing companies to make their decision in 24 hours or less.

4. What About Seasonal Businesses That Need Flexible Finance Terms?

Banks more often than not offer businesses a one-size-fits-all loan that aims to give the bank (not the business) the most financial security. Alternative financing companies can assist borrowers obtain financing with flexible terms to enable them to cover their expenses during their “off-season”.
If you’re a business owner seeking additional working capital or may have been turned down by your bank, call our Business Consultants at National Business Capital. We will be glad to address any questions you may have about how we can assist your business to cover your current need for additional cash flow. Let’s establish a solid financial relationship to help you to obtain financing quickly whenever your enterprise needs an infusion of capital to succeed. Contact us at (888) 888-9124.

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!


About the Author, Megan Capobianco

Megan is passionate about helping business owners along their journey - providing them with relevant content they can use in their day-to-day operations.

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.