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Best Alternative Business Loans: Top Unconventional Lenders

Best Alternative Loans

With traditional lending lending markets restrictions on lending over the past few years, there has been a need for small and medium-sized businesses to obtain capital to help meet its business’s needs. Even for a company with good credit and solid cash-flow, a company may find themselves locked-out of traditional bank lending options. And even if a small or medium-sized firm does have a traditional lender willing to provide the company capital, the amount of capital being provided by the lender may not be enough to cover the company’s needs, but also may have restrictions on use.

The process involved with getting a traditional bank loan from a large, small or community bank can also be slow and cumbersome. Traditional lenders require lots of financial documents (including business and personal tax returns, income statements, balance sheets, debt schedule, accounts receivable and accounts payable schedules, etc). If a company’s financial statements aren’t up-to-date, they can find themselves at the mercy of their accountant’s and CPAs to complete the financials to fulfill the lenders’ document requirements.

With that having been said, traditional banks are still the primary source of financing for firms of all sizes making under $10,000,000 a year. But for small and medium-sized companies in need of cash immediately, or companies that lack sufficient credit or cash-flow to support a traditional bank loan facility, an alternative business loan my be the right choice – or only choice – to help finance their business.

What are Alternative Loans?

Alternative business loans are forms of business financing that is not provided by a traditional bank or SBA lender. Many alternative business lenders are online business lenders offering smaller amount loans (usually under $250,000) with shorter terms and higher interest rates than traditional business lenders. With lower credit and cash-flow requirements than traditional bank lenders, and with fewer documents requirements before funding the business, alternative lenders offer many companies the ability to obtain business funding when a bank loan wasn’t available.

What are the Uses of Alternative Loans?

  • Working capital
  • Business Purchase
  • Business Expansion
  • Pay Payroll
  • Invest in Advertising
  • Pay Suppliers and other commitments
  • Hire employees
  • Pay taxes
  • Purchase Equipment
  • Pay mortgage or make lease payment

What Kind of Loans Do Alternative Lenders Offer?

Loan Products offered by alternative business lenders include:

What are the Types of Alternative Business Lenders

Alternative business lenders include:

  • Midprime alternative lenders
  • Subprime alternative lenders
  • Merchant cash advance companies
  • Equipment leasing companies
  • Invoice Factoring companies

Mid Prime Alternative Business Lenders

Midprime alternative lenders offers loans that are the middle-ground between bank rate loans and high-interest merchant cash advances.

  • Rates: 7.99-29.99%
  • Terms: 2-5 years
  • Repayments: Weekly or Monthly
  • Fees: Moderate
  • Speed of financing: 7-14 business days

Sub Prime Alternative Business Lenders

Subprime alternative lenders offer both loans and lines-of-credit are higher-interest rates than midprime loans, and generally require some of hard business asset as collateral.

  • Rates: 14.99-34.99%
  • Terms: 1-3 years
  • Repayments: Daily, Weekly or Monthly
  • Fees: High
  • Speed of financing: 5-10 business days

Merchant Cash Advance Lenders

Merchant cash advances aren’t loans, but the sale of future bank deposits and/or credit card sales in return for a lump some of money in advance.

  • Factor Rates: 1.15-1.55
  • Terms: 4-24 months
  • Repayments: Daily, Weekly
  • Fees: High
  • Speed of financing: 1-3 business days

Invoice Financing Lenders

Invoice Financing allows companies to leverage their unpaid invoices (under 90 days) to obtain quick business financing.

  • Rates: 1-3%
  • Term: When Invoice is paid-off
  • Fees: High
  • Speed of financing: 1-3 business days

Equipment Leasing Companies

Leasing Equipment is an alternative solution that allows businesses to acquire needed equipment, without having to pay the full-cost of the equipment upfront.

  • Rates: 5-15%
  • Term: 3-7 years
  • Fees: Moderate
  • Speed of financing: 3-10 business days

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