If you need to get a loan for your business, going through a bank might not be the best idea. In fact, fewer and fewer businesses that need funds are choosing to go the traditional route for a number of reasons. When you find yourself in need of money for expansion or to get through a difficult period, it’s important to learn what your best options are. Traditional business loans are certainly denying, and you will want to know why.
Complicated Application Process
The application process for getting a traditional loan has become far too complicated. Most banks require an insane amount of paperwork to be filled out and submitted by businesses that need a loan. This process is also very long and time consuming. It can take weeks to get the money you need when going through a bank. The application process alone can stretch out for a long time, and you may not even get approved.
They Cannot Survive in such a Competitive Marketplace
These days there are lots of alternatives to traditional business loans, including crowdfunding and peer-to-peer lending. With the rise of all these different borrowing options, banks are having a very difficult time getting business. There is more competition for these loans than ever before, and it’s definitely not something that is going to change anytime soon.
They Often Require Collateral
A lot of banks require businesses to put up property as collateral in case they are not able to pay their loans back. This property could be your car, home, or even your business itself. Secured loans can be a huge risk for anyone, so you will want to think twice before applying. Even those who are very confident of their ability to repay the loan could find themselves unable to continue making payments. You never know what the future has in store, so it’s better not to get a loan that requires you to risk everything.
A Majority of Businesses Cannot get Approved
It is a fact that the average business doesn’t qualify for a traditional bank loan. The standards that banks have for borrowers have gotten pretty ridiculous. You pretty much need to have a perfect credit score to get approved for a traditional business loan these days. Private lenders tend to have much lower standards for businesses that need funding.
Should I Borrow from a Private Lender?
These days a lot of businesses are turning to private lenders to get the funds they require. Getting a loan through one of these lenders is much easier and less frustrating than going through a bank. If you want to get money for your business as quickly as possible, it is important to at least consider this option. There are lots of reputable private lenders out there that you can borrow from.
Some of the benefits of getting a business loan from a private lender include:
• Bad credit doesn’t disqualify you: Just because you have bad credit doesn’t mean you can’t get the loan you need. A lot of private lenders offer loans for businesses regardless of what their credit is like. Many young people who need money for startup businesses don’t have much credit at all, but they are getting funding from private lenders.
• Flexibility: Private lenders tend to be a lot more flexible than banks when it comes to working with borrowers on an individual basis. You will find that these lenders are more willing to negotiate the terms of your loan so you can get what you need. One of the biggest problems with banks is that they are too stringent.
• Quick and easy application process: Filling out and submitting an application for a business loan through a private lender is very simple and doesn’t take long at all. You can go online to submit your application, and you’ll hear back from the lender within 24 hours. Those who apply for one of these loans through a bank might not get a response for weeks. If you are approved for a loan, you can expect to receive your funds in a similar amount of time.
• Reputable lenders: There are many reputable and trustworthy private lenders that you can borrow from. It is important to be aware of scammers, but there are lots of great opportunities.
The fact is that private lenders have a lot to offer when compared to banks and even credit unions. An increasing number of businesses are going online to get the funding they need from private lenders, and for good reason. These lenders make it much easier to get the money you require without having to jump through a lot of unnecessary hoops.
Business loans from private lenders can be much more affordable as well. If you need to save all the money you can on your next loan, this is probably the best option you have. You will need to find the right lender, but it’s well worth the time and effort when you consider the benefits.
You will find that peer-to-peer lending has a lot to offer for those who need a business loan. These platforms connect businesses and individuals who need to borrow money with reputable lenders that can match their needs. P2P lending has grown quite a bit in popularity over the years because of how well it generally works for most people. You should at least explore this option before making a final decision.
Is it ever a Good Idea to Apply for a Bank Loan?
Sometimes banks can be helpful if you need a business loan, but only under very specific circumstances. If you aren’t in a big hurry to get funds and have good or great credit, it is an option you should consider. Banks tend to offer better interest rates than private lenders, but they aren’t of much help to the average person. Those who have bad credit will likely get their bank loan rejected.