Last Updated on January 22, 2023 by Faiza Murtaza
The requirement for business loans is thriving because of the growth in the number of startups. Young entrepreneurs want to start their business ventures with innovative business ideas. This has propelled the emergence of small business funding providers that help small enterprises get up and running in the shortest possible time. Alternative funding is a better option than traditional funding in several ways.
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Policies of risk appraisal
Traditional banks facilitate stretching out the repayment schedule and may offer loans at comparatively lower rates of interest than their private counterparts. However, these banks have very stringent policies for loan approval and a new entrepreneur may not fulfill most of the criteria.
Traditional funding through banks depends on rigid extremely rigid policies of risk estimation because the approval of a loan is subject to your repayment history. Traditional banks need pledging of your property as collateral. These policies can play spoilsport for young entrepreneurs who may not have any repayment history to prove their creditworthiness or may not own any property to pledge as collateral.
Alternative lending companies such as alternative funding group, offer flexible policies to enable startup owners to gain prompt access to capital. Besides providing relief from the hassles of proving your repayment capability through your credit rating, these funding group companies can also bypass bankruptcy, negative account balances, and tax liabilities.
Faster approval and disbursement
The lengthy application process of traditional banks moves at a snail’s pace may require two to three months for the loan approval. Reputable US business funding providers may disburse the loan in less than 48 hours in most cases.
This makes alternative business funding a clear and better choice for entrepreneurs who want to cash in on a business opportunity without losing precious time. However, the selection of the alternative funding provider needs to be done with due care. Ideally, it is advisable to choose an established lender such as Alternative Funding Group to be on the safer side.
Repayment structure is a vital aspect of any small business funding. Small entrepreneurs need to have a convenient repayment structure with small installments. Although traditional banks may offer a loan at a slightly lower rate of interest, there may be some hidden charges to process fees and other charges. These banks may not allow full repayment before the loan period and may even penalize a borrower for early repayment.
With alternative business funding, the repayment facility is convenient with daily or weekly installments of small amounts. If you wish to close your loan by paying before the schedule, alternative funding providers may offer an incentive to you for the early closure of the business loan.
The rates of interest may be on a slightly higher side if you are planning to seek business funding from alternative lenders. However, there will be no hidden costs or penalties for missing a payment if you inform the lender about such a possibility in advance.
If you cannot get a loan from a traditional bank or if you need the funds to start the business urgently, then approaching an established US business funding is a prudent choice. Alternative Funding Group is helping many small businesses fuel their business ventures with prompt access to business capital.
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