Acquire Funding for Small Business to Grow
If you are considering funding options to help your business, you should know your options. Initially, you might think of a bank loan. Bank loans are generally for a short term—between six to seven years—and the duration can often vary based on the type of financing required. The loan is generally secured with some type of collateral. You will generally pay an origination fee, interest, and additional fees depending on the lender and type of loan. Business loans can offer the security of a fixed monthly payment and fixed interest rate, although variable rate financing may also be available.
Small Business Loan Lenders
If you plan to seek a loan from a bank, you should be prepared to provide a detailed explanation of how the funds are to be used. Most importantly, you will also be required to detail how you plan to repay the loan. The bank will require recent personal income tax returns, bank statements, credit history, and other personal financial information such as business tax returns.
Participants in the alternative funding space offering online and mobile applications work a little differently. The application, for example, can be completed in less than five minutes. This compares to the average of about twenty-five hours that small business funding spend on filling out paperwork at an average of three conventional banks before securing some form of credit, according to the Federal Reserve Bank of New York’s Fall 2013 Small Business Credit Survey. Online applicants can be approved in hours and have the money in their account in just days, whereas in the conventional banking model small business funding owners may not be approved for several weeks.
Another way in which online lenders differ from banks is the way in which we make our funding decisions. We use predictive modeling, data aggregation, and electronic payment technology to assess the health of a business. Banks and other traditional lenders generally consider both the small business funding owners’ personal credit history and key metrics about the borrower’s business. Alternative lenders use these indicators but also focus on current cash flow and performance of the small business funding using a broad array of traditional and nontraditional data sources.
Acquire Financing for Small Business to Grow
Small business financing are a diverse group in terms of the services and products they cover and their needs. Generally, a business is considered “small” if they have zero to 499 employees. They range from startups—who depend equally on the owner’s cash injections and bank credit—and the combined resource of the owner’s and his or her relative’s savings.
The options for loans for small business financing owners are shifting. In 1995, most bank loans were made to small-business owners. By 2012, that number dropped to half, according to a Harvard Business School study. While small banks still fill a key role in lending, large banks have been less generous than smaller lenders, according to the same study. This leaves the new kid on the block: online lenders.
Alternative Lenders for Financing Small Business
Online lenders—or alternative lenders—use algorithms based on traditional credit standards that include personal credit scores and cash flow lenders, as well as nontraditional metrics to underwrite loans, lines of credit and accounts receivable financing. The nontraditional metrics include social media presence as well as payments to vendors. This type of lending is a boon for business owners who have been in business for at least a year and have a certain amount of revenue over a twelve month period.
No matter where you’re financing comes from, as a business owner it is important that you know and understand all of the terms and conditions associated with the loan before you accept the funding. It is in your best interest that you choose a lender who understands your business needs and will work with you if you begin to run into trouble.
Fast Capital 360 provides funding for small businesses in multiple industries with different financial needs. It doesn’t matter whether you are looking to use your small business funding for purchasing equipment, increasing inventory, hiring employees, marketing, remodeling or expansion, refinancing debt, or working capital. Whatever your need, we can help you find the right funding option.
For more information on why Fast Capital 360 is the best choice for your small business, contact us today at 800-735-6107.