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All you Need to Know About Alternative Lending

One crucial aspect of running a business is the need to secure funding. Initially, you may opt to finance your startup from savings or loans from family and friends. However, you need to think outside the box especially if you plan on sustaining growth. In this case, you should consider alternative lending such as Small Business Administration (SBA) loans. Here is a guide on alternative lending.

What is Alternative Lending?

Alternative lending refers to the process of reaching out to nontraditional lenders for financial assistance for your company. Alternative loans were traditionally known as unsecured loans. This has, however, expanded to accommodate marketplace lending and crowdsourcing.

Types of Alternative lenders

Direct private lenders– refers to individuals who use their money to provide grants and offer financial assistance to your business.

Crowdfunding lenders– this entails borrowing money from different individuals to support your business. Mostly used by startups.

Marketplace lenders– allow you to borrow directly from investors thus referred to as peer-to-peer (P2P) lending. Your credit score determines whether you are going to receive funding from marketplace lenders or not.  

Benefits of Alternative Lending Options

The growing popularity of alternative lending is mainly associated with its benefits which include:

Fast turnaround

Simple application process

Flexible loans  

Frequently Asked Questions

Is alternative lending better than conventional borrowing?

Most business people want to know whether they stand to benefit from alternative loans or not. Unlike traditional loans, alternative lending is hailed for having shorter payment terms, flexibility, and faster processing. This is also suitable for individuals that do not qualify for conventional loans.

Which year was alternative lending launched?

Financial experts claim that marketplace lending emerged around 2005. There were also P2P loans available around the same period. This trend mainly emerged due to limitations by conventional banks to fund businesses, especially startups.

Parting Shot

Alternative lending has been resourceful to thousands of businesses in the country. Are you in need of an alternative loan? Get in touch with Hedge Commercial Capital for professional assistance.