These fast and more easily accessible alternative lending methods might be a better fit for your business than a traditional bank that has high borrower requirements.
Small business financing is notoriously difficult to procure. Most bank loans require that the applicant have stellar credit and two+ years in business – and even then, theres no guarantee youll get a loan, especially if youre applying with a large bank. According to Biz2Credit, big banks approved just 13.6% of all small business loan requests in , while small banks approved 18.9% of applicants, and alternative lenders approved the largest share, 24.5%, of SMB loan applications received.
Traditional loans became more difficult for small businesses to access during the pandemic, as banks were hesitant to lend to small businesses that might be at risk of closure. As a result, alternative “fintech” lenders were busier than ever, especially with fulfilling SBA-backed PPP loans.
Even as we emerge from the pandemic, small businesses are still turning to alternative business loans, as more business owners have gotten comfortable with online financing. With most of the options presented below, you can apply online and get funded much more quickly and easily than you would with a bank loan.
Read on to learn everything you need to know about the world of alternative small business loans. Well also give you some recommendations about reputable alternative lenders.
What Is Alternative Business Financing?
Alternative financing is a means of obtaining capital outside of the traditional banking system.