Alternative Lending: How to Find Alternative Funding Sources
In today’s financial climates, companies are at a high risk to stay in competition with one another. As such, it is important that they either maintain a steady revenue stream or at the very least have ready access to assets. For many of these companies, there is a need to finance certain ventures. In the past, lending used to be obtained through traditional means such as banks and brokerage houses. However, in recent years, new means of gaining capital have been available. Often referred to as alternative lending, these non-traditional ways provide quick access to funds. But the question that many companies ask is how can they gain access to these alternative sources? The answer is with just a small bit of effort, as these options are easier to locate than can be imagined.
The first place to go for any type of financing is right to the computer. By doing a simple search under the term “alternative lending,” a bevy of lenders come up that offer other ways of obtaining funds other than the traditional loan from a traditional lender. There are a number reasons to choose alternate funding, most centered on the need for an easy process, a quick turnaround, establishment of credit and credibility. Whatever the reason, anyone who applies for alternative lending should be aware of the different types out there and their advantages and disadvantages. The different types of alternative funding can include factoring, equipment sale-leasebacks, merchant cash advances, purchase order financing, microloans, or auctioning receivables. A wary consumer will examine each to determine the best choice.
Word of Mouth
After finding a few sources of alternate lending choices, it is best to investigate other client experiences with the type of lending that is being considered. This is especially true when it comes to the negative effects that are associated with alternative sources of income. For instance, a potential downside to many of these options is a higher interest rate. Other disadvantages can involve underestimating profits or loss of equipment or inventory. Receiving word of mouth from actual clients can help other companies understand the potential risks and make a deal with a reputable fair lender as well.
There is a such thing as going with natural instinct. If a deal seems too good to be true, the chances are likely that it is. It is up to clients to complete due diligence in any transaction that involves lending. After finding a deal and getting testimonials, another wise investment to make is researching the company’s history and credit rating. It also doesn’t hurt to see if it has a Better Business Bureau standing.