Almost every business needs a small business loan at one time or another. Yet the statistics are pretty sobering.
According to research conducted in the States in March 2016, only 23% of loan requests to large banks were approved, as opposed to 63% by institutional lenders, 49% by smaller banks, 42% by credit unions – and 61% by alternative lenders like Cashsolv.
However, a far higher chance of acceptance isn’t the only reason you should consider us or other online lenders – here are six more.
1 Online lenders are more open to young businesses
If you’ve been in business for less than two years, you don’t even stand a 23% chance of being offered a small business loan by a large bank. In general, major lenders look for two to five years of solid and predictable trading before they’ll put their money on the line.
In contrast, most online lenders are happy to deal with any business that has been around for as little as six months.
2 Online lenders are more forgiving of poor credit scores
Even if your business is established and doing well, there’s every chance a bank will reject you for having a poor credit score.
In contrast, online lenders generally don’t have a minimum credit score and prefer to evaluate potential borrowers on the basis of their trading history and business plans.
3 Online lenders will consider businesses that aren’t yet profitable
To stand any realistic chance of getting a bank loan, you don’t just need to have been in business for at least a couple of years – you must have been profitable too.
Most online lenders will be more interested in your trading history when it comes to a small business loan rather than in your profitability, and will generally be far more flexible.
4 Online lenders are happy to lend to combat cash flow problems
By and large, banks don’t like to lend to provide working capital. They prefer borrowers to have a clear, longer-term purpose in mind for the money.
5 Online lenders don’t have problems with small business loans
Big banks aren’t particularly interested in small loans, as they can’t make much profit with the base rate at a historic low. That’s largely because the cost of administering a loan is identical whatever the amount – and banks’ application procedures are notorious for being labyrinthine. That brings us onto our final point.
6 Online lenders can provide cash quickly
Even if your bank is happy to lend, you’ll have to jump through hoops to get the money. Banks will typically request to see profit and loss statements, balance sheets, your articles of incorporation, tax bills, directors’ CVs, a business plan and more before making a decision.
In contrast, if you need cash fast, Cashsolv business loans can be inside your account in under 24 hours.