When your small business needs funding, the loan application process can take anywhere from a few days to several months, so you need to do everything possible to expedite the process. If your business needs cash right away, your best bet is to apply online with an alternative lender, although you can expect higher interest rates than you would from a traditional bank. There is a sound business reason for this, however, since alternative lenders require less documentation and make approval much easier for applicants. This, in turn, creates a higher rate of default, which must be absorbed by the alternative lender.
When you’re submitting loan applications to a conventional bank, you can expect to have to supply a great deal of financial documentation, and you can expect to be required to have a high credit score. You will also probably have to be in business for several years in order to be approved, and you’ll need to have a low debt ratio as well.
Compared to banks, alternative lenders require far less documentation and approve a great many more loan applicants. You generally won’t need to have a high business credit score, because in many cases alternative lenders are more concerned with how quickly your customers pay their invoices. It’s also fairly easy for alternative lenders to establish the stability of your business simply by evaluating your existing loans and what kind of incoming revenues you have.
There are generally some fairly extensive requirements associated with loan applications submitted to the Small Business Administration. However, if you are approved for an SBA loan, you’ll have the surety of knowing that a high percentage of your loan is guaranteed by the SBA itself, and that means you’re much more likely to be approved by a traditional lender who would grant you the loan.
Ready to apply for a loan?
If your small business is in need of funding for some reason, we may be able to provide the financial assistance you require. Contact us at Avery James so our financial experts can consider some alternatives with you that may give you the help you need to grow your business.