Here's an interesting stat: only about 50% of all small businesses that begin this year will be around in ten years.

Lack of funding is one of the main reasons why businesses don't survive. Imagine that, not poorly run shops, or owners that give up on their businesses... It's the fact that businesses do not have enough funding to keep going. Most small businesses are unaware that other options than traditional bank loans are even in existence. For the mom and pop shops of the world, most won't qualify for traditional business financing leaving them at a dead end. Or so they think...

What Is Alternative Lending?

Alternative lending is any type of lending that happens outside of a traditional bank. Most alternative lending companies generally operate online, and can provide a borrower with multiple options to fit their needs.

Alternative lending has become more mainstream over the past several years due to the number of restrictions and requirements traditional banks have in place. These strict guidelines often discourage many from pursuing a small business loan. Making small business owners look for alternative methods to obtain the financing they need for their businesses.

The economic downturns that have occurred over the last decade and a half have strapped companies of all sizes—forcing some out of business and others to turn to sources of alternative business funding.

Traditional minority groups like African-Americans and women-owned businesses have suffered the most significant loss in traditional lender settings. Many alternative lenders are known for issuing unsecured loans, making business loans for women and African-Americans easier to secure in today’s current market.

Here’s a list of the most common types of alternative lending programs that are available to businesses:

1. Small Business Loan - traditional bank style financing, with a set amount being borrowed and it being paid back over time.
2. Business Line of Credit - the most flexible program type rather than a fixed amount at one time, funds are accessible as needs may arise
3. Equipment Financing -  tye type of funding businesses use to purchase or lease equipment related to their businesses
4. SBA Loans - yes you read that correctly, alternative lenders have access to government backed business loans such as SBA 7(a) and 504 loans

Alternative Lending Requirements

There are also funding requirements for alternative lenders, just as there are traditional term loans issued by banks. However, alternative lending platforms make it a bit easier for some applicants to reach their lending requirements. Typically, FICO score is not a large factor in determining your eligibility with an alternative lender. Alternative Lenders tend to look at the entire picture of the company, including their time and business and monthly and annual sales.

Benefits of Working with Alternative Lenders

The following are some advantages of working with alternative lenders.

• Flexible qualifiers for funding
• Perfect credit is not a requirement
• Fast approval and funding

If you're considering obtaining alternative business funding, make sure you do you research and work with a reputable company. Ask questions and work with your advisor to get the best options available for you and your business.

If you have questions surrounding financing for your business, feel free to give the team at ROK Financial a call or complete our simple 15-second application to and speak with one of our knowledgeable advisors today!