Finance & Lending

 

04 15 2013

04 15 2013

More Small Business Loans Borrowed from Alternative Lenders

According to a recent Forbes magazine article, small business owners take out about $300 billion in small business loans from banks each year, yet banks continue to underserve them. The article reports that on average, big bankers prefer to dole out millions to larger companies, while often committing substantially less funds to small businesses because they see smaller organizations as risky. Banks that lend typically rely on the credit score data of the business owners as a shortcut for due diligence, and small business owners are often more likely to have lower credit scores and incur higher interest rates.

A New York Times blog post recently acknowledged that sometimes banks blindly refuse to lend to small business owners and entrepreneurs. Since they are not generating as much income as bigger organizations, small business owners often are more likely to have credit card debt, lower credit scores, smaller streams of income, and other red flags that tend to cause banks to shy away from lending.

While big banks seek out already established companies to use their lending services, many small business owners find they can turn instead to alternative lenders. CNBC News reported that the majority of small businesses with under $10 million in annual profits can secure their merchant cash advance and loans through smaller lenders. Each alternative lender typically relies on its own system to comprehensively collect data and evaluate potential borrowers to get a fuller picture of the business owner. More recently, alternative lenders have begun using technology to inform the decision-making process. Some are using online databases and social media rankings to assess small business potential.

Small business owners who are ready to secure funding with a small business loan or merchant cash advance may want to consider working with National Funding – an industry leader that provides financing solutions to small businesses.

Featured


  • How to repair bad business credit

    How to Stretch Every Dollar For Your Small Business

    Small businesses don't always have a surplus of cash lying around. When your enterprise performs well or you have an exceptional month in terms of sales, you're shrewdly deciding how to best allocate that revenue to keep the company stable and grow in an effective, sustainable way. Because most small organizations don't have the endlessly… […]

  • Working capital for small businesses

    How Much Working Capital Does a Small Business Need?

    Your business needs money - there's no doubt about that. Cash allows you to purchase equipment and supplies, fund marketing campaigns and pay salaries - yours included! But just how much working capital should you have at any given time? Every business has its own unique needs, so no two companies' financial requirements will be… […]

  • National Funding Small Business Tax Prep Guide

    Guide to Tackling Tax Prep for Small Business Owners

    Download the straight-forward, easy-to-read guide to tax preparations for small business owners in any industry. Finally, a practical resource that explains how to get the most out of your business Federal tax return in a way that’s conversational, approachable and achievable. Why download this guide? So much more than a bulleted list of links and… […]

  • How to create an email marketing campaign

    Create An Email Marketing Campaign Your Audience Will Want To Read

    Email marketing is a tried and true way to speak directly to your company's biggest fans. If they're on your email list, they've already connected with you in some way or another - perhaps they made a purchase, created an account or simply signed up for your newsletter. However, just because the people on your… […]