Obtaining Business Financing In 2023...

If you've been watching the news lately, you've probably seen the headlines stating that interest rates are rising in addition to inflation. Many believe that because the Federal Reserve is increasing interest rates, traditional business lenders are tightening their underwriting standards, which will make it very difficult for businesses to get the money they need to grow and survive in 2023.

Many people are turning away from traditional lenders in favour of alternative lenders as a result of these circumstances.

Despite the prevalence of Main Street businesses across the U.S., small business owners have traditionally faced difficulties when it comes to accessing financing. Luckily, the alternative lending industry has developed as a solution to this problem.

Whereas small businesses are often turned away by banks and credit unions, alternative lenders offer business loans that are accessible, flexible, and quick to fund.

Wondering if an alternative lending solution is right for your business? We’re here to help.

In this guide, we’ll break down some of the top alternative lenders, the most common types of alternative loans, as well as the possible advantages and disadvantages of alternative vs. traditional bank lending—so you have all the information you need to make the best decision for your business.

What is an alternative business lender?

In short, alternative lending refers to business loans that are available outside of traditional bank lending.

Instead of banks or credit unions, alternative lenders are typically online-based, private companies that operate like the lending arm of a bank.

This being said, alternative lenders offer a range of business financing products, including term loans, business lines of credit, invoice financing, equipment financing, and more.

In addition, whereas bank loans are traditionally difficult to qualify for—with strict requirements, extensive application processes, and lengthy time to funding—alternative lending is characterised by speed, flexibility, and accessibility.

To this point, although alternative lending products typically have higher interest rates than bank- or SBA loans, they have more flexible requirements (credit score, time in business, annual revenue), thereby offering funding to a wider variety of small businesses.

Plus, most alternative business lenders use algorithms to underwrite loan applications quickly, software to scan business financials and sync with accounting files—and allow the entire application process to be completed online.