The Definitive Guide to Alternative Lending

What is Alternative Lending?

You know banks as the traditional financing institutions.Alternative Lending is lending that takes place outside of a banking institution, consisting mostly of non-bank

companies that provide funding to small businesses.

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What does the industry look like?

Let’s take a look at the numbers:

The approval rating from alternative lenders is

61% - 64%. Big banks have a

13% - 20% rating on average.

Alternative lending is an growing fast: approx. $3 billion

in 2013 was lent through alternative channels

(double that of 2012).

Benefits of alternative lenders include:

less paperwork, more flexibility, faster funding.

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A Few Examples of Alternative Lending:

Microfinance lenders and institutions

Pawnshops

Money orders and money transfers you make outside of a bank

Door-to-door money lending services

Payday loans

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Advantages of lending online:

Online alternative lenders use complex algorithms, software and all sorts of other non-traditional sources to scan your business’s financials.

Who could benefit from Alternative Lending?

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Previously Bankable Business Owners

Banks raised the criteria for business owners who could

qualify for their financing, leaving them no chance to turn for extra capital.

Previously Unqualified Business Owners

Alternative lenders also cater to borrowers

who wouldn’t have been eligible for

a bank loan.

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The Advantages of Alternative Lending

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Speed & Ease of ApplicationApplying for a business loan

can take as little as 30 minutes

Quick Turnaround TimeWhereas banks can take a few weeks, to get back

to you about your financing, alternative lenders will often

send you their decisions in a matter of days,

sometimes even within hours.

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Speed, efficiency, and diversity of offerings can make a big difference. Here’s a list of reasons why:

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Flexible UnderwritingAlternative lending lets small business owners grow their

companies in ways they couldn’t when bank lending

was the only choice.

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Diversity of LoansAlternative lenders will let you get paid for your

outstanding invoices upfront, order a bundle of business credit cards, crowdfund your idea,

or go for the classic solutions such as term loan.

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The Disadvantages of Alternative Lending

Considering whether it’s for you? Consider those potential negatives:

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Shorter Terms & Smaller Amounts

Depending on the products you qualify for, alternative loans might have shorter

terms in most cases.

More ExpensiveComparing traditional

financing with a short-term loan,

the price tag difference is a big one.

More Frequent Repayments

Plan ahead carefully - many loans given

by alternative lenders have weekly or daily

repayment schedules.

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Kinds of Funding you can get from Alternative Lending:

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Term LoanLoans with a set repayment time, a set number of payments,

and a fixed/variable interest rate.

Equipment LoansThese let you finance up to 100% of the value of the equipment

for your business, making it act as a collateral. This way lender cares more about its value

rather than your credit history.

Lines of CreditA business line of credit allows you to draw funds when you need,

pay them back, and take out more later on.

Invoice FinancingThis form gives you an advance on the money

you’re already owed, so you don’t have to wait for your clients to pay you before you can cover your own bills

Startup LoansA broad category of alternative lending – different lenders have their

own kinds of loans for new businesses without any history.

Merchant Cash AdvancesThis solution is tailored for those processing credit cards, giving

an advance that’s paid back with a percentage of your daily transactions.

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Getting Started

Small business lending marketplaces like Fundera make it possible to get several offers

with a single application.

We keep it simply by delivering you trusted best-fittingoptions from the most trustes lenders

in the industry.

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