Alternative financing is paramount during an economic downturn. Serving as a not-too-distant reminder, small businesses saw lending dry up and access to credit disappear in the aftermath of the 2008 financial collapse. However, a lot has changed in the intervening years—mainly alternative lenders carving out a unique niche in the market, with technology serving as, if not the great equalizer,
a democratizing power.
This guide will help explain the alternative financing industry, various lending options, the role of fintech outfits, and more.
Welcome to the The Complete Guide to Alternative Finance Options in a Downturn.
It should go without saying that if you are in need of business capital and have the ability to secure a loan from a traditional lender such has a community bank or even one of the big banks, this is one of the best options. Small businesses that are profitable, have been in business for several years and can demonstrate future earnings will find this method preferable to most other options. Unfortunately, banks still aren’t lending at nearly the same rate they were prior to the financial crisis and small businesses have been on the receiving end of more “no’s” than “yes’s” over the past decade.
RELATED: 3 Differences Between a Merchant Cash Advance and a Traditional Loan
For businesses that have been around for a few years, have positive financial statements, timely tax filings and assets on their balance sheets, financing from the SBA is the very best route to choose.
Online Business Loan (Merchant Cash Advance). This brings us to the point of this article. If you aren’t able to tap into friends and family, don’t have enough personal equity in your home or fall short of the stringent requirements of most financial institutions, you aren’t alone.
Some platforms charge an application fee on all submissions. Others will charge an application fee on successful transactions and debit it from the borrower’s account. Original Funding does not charge for applications - period.
It’s important to know that the lender you’re working with is well-capitalized and transparent. Original Funding has vetted our current roster of lenders and is always searching for partners that meet our standards.
Most brokers send your application to multiple lenders as soon as it is received. This is a dangerous practice as it can lead to several “hard checks” on your personal credit, which ultimately has a negative impact on your credit rating. Original Funding carefully reviews your application and any supporting documentation then forwards it to the partner we believe is your best match. If your application is denied, we find out the reason and communicate with you directly. Before we send it to another partner, we ask your permission.
Original Funding has partnered with a marketing firm that publishes industry insights and “best practices” white papers. We make these resources available on our website.
Original Funding receives a commission on all successful loans paid to us directly by the lender. Some brokers have negotiated the ability to “upcharge” the borrower on top of the loan in what is known as a “junk fee.” Original Funding condemns this practice and only receives payment when our transactions are successful.
Original Funding is a completely secure environment. Data is uploaded through a secure portal and conveyed to our secure partner lending environments. Sensitive documents such as bank statements are separated from your application to avoid digitally linking the two. Furthermore, we do not sell your information. If you fill out an application through the Original Funding platform you are automatically entered into our database to receive email notifications and our newsletter. You can opt out of these notifications at any time.
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