Getting the right funding for your business can be quite a hassle. Most people have shortlisted banks as the best possible option for them when they are looking for funding, but the bank isn’t always the best way to go forward. When you look for funding you should make sure that you go for the option that is best for you. Going for an option that isn’t suited to your needs can cost you quite a lot.
Businesses first always look to try with traditional banks. Banks seem to have the most authentic method of lending, which is why businesses see them as the messiah that should come and save them in their hour of need. However, banks do not always happen to be good for you. There are times when banks can be quite hard to deal with, which is why you should make sure that you have other alternatives at the ready.
If you are thinking of heading to private lenders, then here we have a list of pros and cons that can help you in the process:
The pros of getting a small business loan from a private lender include:
Approval on Revenue
The approval you get would be based on the revenue you are generating. Most banks do not take revenue into calculation and tend to focus a lot on the credit score that a business has. The credit score does give a lot of detail on how the business has managed debt in the past, but it isn’t a good indication of how the business would be able to manage this debt.
Extremely Quick Application
When you apply for a small business loan from a private lender, you can be assured of extremely quick results. Gone are the days when businesses had to wait for months so that banks could approve or reject their loan application. Banks were also a bit too harsh on lenders, which is why they would reject most applications.
Private lenders provide businesses with multiple options, which can increase the customization of the loan they get. The merchant cash advance is one of the best lending options that you can get from a private lender when it comes to ease in repayment.
The cons of dealing with a private lender include:
High Interest Rates
High interest rates are a big nuisance for people dealing with small business loans. If your credit score is poor, the private lender can charge you a lot when it comes to the interest rates. However, that is a sacrifice that most businesses with poor credit scores are ready to make for funding.
Categorised in: Blog
This post was written by sharpshooterseo