Nearly every entrepreneur I know has experienced a cash crunch—a temporary shortage of liquid funds that affects our ability to meet our obligations and operate our companies. It happens to the best of us. And while you certainly may need to take a big-picture look at your company and figure out why you're experiencing poor cash flow, that may be a project for another day. What you may really need in order to keep your business afloat is a business loan.
Traditional bank loans can be difficult to obtain for companies with poor or no credit. That's where alternative lending can come into play. Some alternative lenders find loans directly, while others connect borrowers with lenders who invest as part of a loan portfolio.
What follows is a list of options for companies who need a business loan. While business loans from alternative sources can mean less stringent criteria and quicker funding, they may also charge higher interest rates and require personal guarantees for your loan.
Regardless what route you choose, your lender is likely to balance factors like your business cash flow, credit history and collateral.
One of the best known sources of funding for small businesses, Fundera doesn't actually pony up the money for loans. Rather, they act as matchmaker, connecting businesses in need of loans with investors ready to help.
Since Fundera works with a number of different funding sources, there isn't a single list of loan qualifications, but rather a range that may be able to accommodate your company's needs. Your business won't be paying Fundera for hooking you up with a lender. They collect their fees from the lenders themselves.
Pros: Quick funding may be possible, and no credit check loans may be an option.
Con: Relatively high interest rates.
2. Direct Capital
If you're not a fresh-out-of-the-box startup and you want to borrow from an established, reputable company, Direct Capital may be a good choice. It offers a range of loan types and terms, and a business doesn't have to prove profitability in order to qualify.
Pro: May provide more flexibility than some smaller lenders.
Cons: Minimum revenue of $150,000 may exclude very small companies. Some loans may require daily payments.
Just like other industries, lenders can make a name for themselves by creating a niche, and Accion has done just that. Accion is one of the few lenders who cater to startups, and they're also focused on serving green, women-owned, and minority-owned companies.
Pros: Lower interest rates for some loans when compared to other alternative lenders. Customer service also gets positive marks.
Cons: Longer application and approval process. Also, Accion charges an application fee.
Read more articles on alternative financing.
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