How to Choose Between Big Banks & Non-Bank Money Lenders
There are many ways to get financing for your startup or borrow money to invest in new equipment. The most common avenue is to get money from a traditional bank, if that fails, you can try an alternative lender. Although banks are a traditional source of finance for many, lots of SME’s are now opting for alternative lenders. So, how do you choose what’s best for you?
Do You Need Funding Fast?
Let’s say an opportunity has arisen and you need cash fast to make a bold move and take advantage of something that has come your way. If you apply for a loan from a traditional bank, you’ll be waiting a while to receive the funds. It could take weeks for the money to reach your account and by that time the opportunity will be gone.
If you quickly need funding, it is best to skip the traditional lenders and look for an alternative. The process is much faster, and it usually consists of these simple steps.
- Fill out an online application form
- What for contact from a consultant
- Provide extra documentation if needed
- Wait for a reply (usually within hours)
- Transfer of funds (if approved it can take as little as 24 hours)
If you are short on time and you need cash fast, an alternative lender is a better option. If you have time, you may want to look at traditional lenders as they give lower interest rates.
Can You Be Flexible?
Having poor credit history or no collateral means you have almost zero chance of securing money from a bank. Alternative lenders can approve an unsecured business loan if you meet the right criteria. They are business loan experts and they deal with people who don’t meet the conditions that traditional lenders set out.
Alternative lenders can offer customised loans to all kinds of borrowers. If you’ve bad credit history or no collateral, they can still find some way to help. Banks have a rigid screening process and they reject more applications than they approve.
Choosing between these two options all depends on your current situation. If you need funds fast, you are best going for an alternative lender. If time isn’t an issue, you should get in touch with a bank to see if you can get a business loan. It also depends on other factors, such as your credit score, funding needs, level of comfort, and length of the loan.
