Small businesses in the market for a business loan today have more options than ever. Today, if you are unable to get a traditional loan from the bank, a plethora of alternative financing options are now available to help fill the void. Why Traditional Loan Can Be Hard to Come By One of the main reasons traditional bank loans can be hard to come by these days are due to the fact that the number of US banks has dramatically decreased. After the recession bank consolidation has decreased from a peak of about 17,000 banks to less than 7,000 according to the FDIC. The changing landscape and fewer number of small banks means that business loans are no longer based on a local relationship and handshake. Corporate policies now take effect and years of paperwork and financials are now required for most traditional bank loans. Not to mention the amount you are seeking. Most underwriting for a traditional bank loan requires you to be asking for at least $150,000. Mainly due to the time it takes to process a $15,000 loan and a $1 million loan is approximately the same. Likewise, banks will often focus on the larger loans for more established businesses while the smaller businesses are often left hanging out to dry. Enter Alternative Lenders With traditional banks and bank loans for small businesses on the decline, finance and technology has taken a big step forward to fill the gap left open in business financing. Alternative lenders help small businesses that would normally be turned down by traditional lender find financing in other areas. Alternative business loans from these lenders provide business owner with the loan amount they need along with a quick turnaround to help maintain their business operation. Funding Options for Small Businesses Short-Term Business Loans Term loans are an excellent choice for established small business (1+ years) with good credit (650+) and over $6,000 in monthly revenue. While the rates may be slightly higher than a traditional bank loan, they are much faster and easier to come by than with a bank. Short-term business loans work like a traditional loan but are completed entirely online. The terms can range from 1 – 5 years and are available for amounts up to $2,500 - $250,000. Merchant Cash Advances A merchant cash advance is a type of financing, which is not really a business loan. They are repaid by using the expected cash flow from a merchant’s credit and debit card transactions. This type of financing option can be pricey with up to 80% APR, it is a good fit for companies that receive a large portion of their revenues from debit and credit card transactions. Invoice Financing Invoice financing, also referred to as accounts receivable financing, factoring, or purchase order financing allows the business owner to receive capital in the event you are owned money for service completed. In a nutshell, A/R financing is the selling of purchase orders or accounts receivables (invoices) for cash now. This type of financing can be valuable when a contract for products or services is received, but the business lacks the cash to fulfill on the contract. Business utilizing this type of loan will most likely experience; lower interest rates and time savings. A/R financing is innovative, unique, and easy for businesses to qualify for but most be used in the right situations. For more information on getting the right type of financing for your small business, check out Lendio.com or fill out the form below. We’re always happy to walk you through our process so you can secure the money you need, when you need it.