Why are small businesses considering non-traditional lending

small business lending

Small businesses find it hard to acquire funding in difficult times due to bad credit or some other reason. Traditional banks do not approve loans for business owners with bad or poor credit which deprives many small businesses of funds in financial crunches. How can small companies handle having their loan request rejected by traditional banks? Fortunately, there is a non traditional lending industry that is supporting small businesses by advancing loans to businessmen with bad credit.

Small business owners are switching their focus to non traditional lenders. The lenders are flexible, and they are more willing to advance loans to people with bad or poor credit without the need of any collateral. The lenders aim at helping small businesses grow and prosper by advancing loans.

In order to qualify for an installment if you have bad credit, you need to own a business that has been established for few years and has a specific amount of sales every month. Non traditional lenders will not ask you for any assets to pledge if they are convinced that you have a regular income and meet the average monthly sales limit of the lender. Having fixed sales monthly turnover will ensure the lender that you have the ability to repay the loan. You also need to have an active bank account associated with the business for the funds to be deposited.

Bad credit loans from non-bank lenders may not be as cheap as traditional bank loans but availing a loan with bad credit is not only difficult but is also time-consuming. Non-bank lender interest rates are slightly more expensive than that of traditional bank loans. Interest rates are slightly on the higher end due to the risk the lenders are taking towards advancing funds to the individuals with bad credit. Availing loans with bad credit is difficult from traditional banks and financial institutions which justifies the high-interest rates charged by these non-bank lenders. For small businesses that need urgent cash loans, non traditional lending institutions make a great option as these loans can be availed quickly and easily.

There are several loan options available for non-bank lenders for small businesses which include business loans, business loans with bad credit, equipment loans, factoring and discounting bills. But if you are not having any asset or bills receivable on hand, then Merchant cash advance becomes a viable option for you. Merchant cash advance is a non-bank loan that is advanced against the future sales of the business. The borrower receives a lump sum cash advance from the lender against the future card sales of said business.

The business which intends to receive the advance should be an established one with specified credit or debit card sales on a monthly basis to be eligible for the loan. The loan is repaid by the borrower as a portion of sales on a daily basis which is retained by the merchant account provider of the business. The cash advance is based on the sales of the company the borrower is not obligated to make fixed payment when there are no sales or low sales. The cash advance can be availed by individuals with bad or low credit score. These reasons are very attractive for small business owners in need of help to make their dreams come true!


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