Small Businesses Alternative Options to Traditional Loans
It may be difficult for small businesses to get loans in this market, but it is not impossible. One writer suggests that it may be easier if businesses think more creatively.
In a recent article for Forbes, contributor Ty Kiisel argues that there are a number of options available for businesses seeking capital to fund their operations. The problem, he adds, is that most are not considering how they can make the best use of these options.
“Unfortunately, many small business owners look at the options as an either/or choice to be made,” Kiisel writes. “I think it makes sense to look at financing options that are appropriate to different situations and how they might work together to help small business owners find the capital they need.”
The example he gives is that of the relationship between a local business and a community banker. Though in some cases a traditional loan is a good option for the business thanks to low interest rates, that does not mean that it should not also consider alternative lenders. This is especially true if the company in question needs quick access to capital.
Kiisel also mentions that many businesses do not meet the requirements set by traditional banks, meaning that alternative lending is their only option.
This is something that alternative lenders need to prepare for. Though they often charge higher interest rates, this doesn’t mean they can afford to be less stringent about who they lend to. Lenders of all types need to perform a thorough credit risk assessment when processing loan applications, especially those from new clients.