Alternative Lending: Why it Might be the Right Fit for Your Company
Alternative lending burst into prominence in the wake of the 2008 financial crisis, when banks suddenly became far less willing to approve loans, and business capital virtually dried up overnight. The popularity of alternative lending was fueled even more by the fact that arranging for financing is much faster than through traditional bank loans, approval rates are much higher, and credit history is not the critical factor that it used to be with banks. As good as all that sounds, alternative lending may not work for every small business.
When alternative lending might not work for you
If you simply must have a low interest rate applied to whatever form of alternative lending you’re interested in, this may not be your best option. Alternative lenders are obliged to charge somewhat higher interest rates to clients, simply because there’s a greater risk of default on loans being extended. There’s a flip side to that coin which provides for much higher approval rates and imperfect credit history, which is that more borrowers are going to default on their loans. Since alternative lenders wouldn’t be in business long if they just absorbed all those losses, the cost of the defaults have to be passed along in the form of higher interest rates.
When alternative lending is your best bet
If you can’t get business capital anywhere else, alternative lending might be not only your best bet, but it might be your only option as well. When you need immediate cash, perhaps to cover payroll or other business expenses, the speedy arrangement of alternative loans can be ideal. Many startup businesses have no credit history at all, which means traditional lenders would be unwilling to consider them, but this situation is not necessarily unworkable through an alternative lender. There’s a good reason why alternative lending has become so prevalent among small business owners these days, which is that it does provide a very useful and necessary service to businesses.
Alternative lending through Goldendale Capital
If alternative lending is a financial solution which your business would benefit from, contact us at Goldendale Capital, so we can discuss some options with you. Our financial experts will be sure to find ways in which alternative lending can be a big help to your growing small business, and to keep your day-to-day operations running smoothly.