You’ve probably already figured out banks aren’t always willing to be your financial partner when you want additional funds to grow your business. Thankfully, they aren’t the only choice when you need money to handle your cash flow or increase your working capital. Alternative lending sources are available to provide the funds you need.

What Is Alternative Financing?

Alternative financing is funding obtained from a source other than a traditional bank. Familiar financing sources are grants, crowdfunding, pitch competitions, angel investors and peer-to-peer lending. In recent years, online financial technology lenders have emerged that include additional perks of online payments and automated accounting.

What Are the 4 Benefits of Using an Alternative Lending Source?

These alternative lending sources offer your small business several benefits that banks can’t match. 

1. Better Approval Odds – Banks make it hard for those with low or bad credit to secure a loan. Their approval rates are traditionally at about 26%. Alternative lenders rely on an applicant’s total financial picture and not just one credit score to decide whether or not to approve the loan, making the approval process more fair and balanced.

2. Faster Application Process – Banks often take several weeks to assess a business loan application. Any discrepancies they bring up with your collateral evaluation make the process even longer. Applications move much quicker among alternative lenders, and you may see your funds in as little as one day. That’s a big advantage if you need the money quickly to restock inventory or repair damaged equipment.

3. Competitive Loan Terms – To get your business, alternative lenders offer you loan terms and lower interest rates that better meet your needs. In fact, it pays to shop around among these financial sources to find the best deal. On the other hand, banks have set terms and rates that don’t allow for flexibility.

4. Various Loan Options – Alternative finance sources offer several loan options to meet your business needs. These include:

  • Merchant cash advances
  • Unsecured loans
  • Lines of credit
  • Term loans
  • Invoice factoring

One of the most beneficial options alternative lenders offer that banks don’t is a small loan amount. That comes in handy when you discover a deal to install more energy-efficient lighting in your office for $5,000, and you don’t have the extra cash to use right now.

The next time you need any financing for your small business, check out the options alternative lending sources have to offer.