Borrowing working capital through traditional channels means clearing a number of hurdles. One of the largest often involves collateral.
Putting lenders at ease
Making money available to small business owners is a risk on the part of financial institutions, as there’s always the possibility the borrower may not be able to repay the loan sufficiently.
In order to gain more security, lenders typically require borrowers to put up assets as collateral. These assets could take the form of real estate, equipment, inventory or anything in between. Any loan where the borrower pledges some type of asset as security is known as a secured loan.
Sometimes business assets may not be enough to satisfy lenders, however. In these cases, small business owners may be required to put up assets of their own, such as their home.
In scenarios like these, the borrower faces the risk of losing their family home if they were to default on their loan. Fortunately, there are alternatives to secured loans that allow small business owners to obtain the funds they need without putting personal assets on the line.
Working with direct lenders
Direct lenders like National Funding can compete with big banks in the business loan market because instead of strict qualifying and repayment standards, they offer flexible alternative business loan options.
From working capital loans to merchant cash advances, direct lenders provide their own funding, allowing them to save both time and money. They can then pass these savings on to the borrower.
For instance, a small business loan or merchant cash advance from National Funding can provide amounts of up to $250,000 with no collateral required. There are no hidden fees or upfront costs, and borrowers can receive approval and get their cash in as few as 24 hours.
This is just one reason why unsecured business loans from alternative lenders have significantly increased in popularity in recent years.