5 Myths About Alternative Lending
If you’re an entrepreneur looking for funding to get a business going, finding the funding that’s right for you is critical. Because there are several options to choose from, it’s wise to be selective and do your due diligence before applying for a loan. One form of lending that is gaining popularity is alternative lending. You don’t always need to head to the big banks to get the money you need. Before you shy away from this form of financing, consider some common myths and see for yourself that this is a legitimate way to fund your dream.
Credit Scores Are All That Matter
The dreaded credit score: It’s something that keeps some people up at night and prevents others from securing the loan they need. For those with high credit score, there’s little worry, but if your score is on the low end, you might have difficulty securing the financing you’re looking for. Some people think the credit score is the only factor in alternative lending, but this isn’t the case. While it is taken into consideration, lenders have other criteria as well.
If You’re Business is New, Forget About It
If you’ve heard that alternative lending isn’t an option if you’re just starting out in your business, you’ve heard wrong. Lenders in this space may have stricter guidelines for a new business, but this doesn’t mean you’ll be out of luck.
The Process Takes Forever
Maybe you’ve heard horror stories about mountains of paperwork and furnishing the lender with reams of information. Undoubtedly, this would all delay the approval process. Drawn-out approval processes can be frustrating, but an alternative lender can get your money funded in as little as two days. Actual approval can come with 24 hours of your application.
Lenders Are Scamming Borrowers With Exorbitant Rates
Alternative lending does bring with it higher rates than you’ll find with a traditional loan from a bank. Furthermore, there have been, unfortunately, unethical practices among lenders. However, the business, by and large, is filled with honest lenders who will do all they can to get you the best rate possible.
Approval Is Random
A negative rap against this form of funding is that there are no set guidelines and that approval is inconsistent from borrower to borrower. The fact is, if you have a decent credit score, can demonstrate that you will be able to repay the loan and have a solid marketing plan for your business, you are fulfilling the requirements for alternative lending.