If you’re having problems getting a traditional business loan from your local bank, it may not be a bad idea to explore alternative business lending. Did you not get approved for your business loan because of your personal credit and business credit? As a business owner, here is what you can do:
- During the term of your alternative business loan, repair your personal credit and business credit and then re-apply for a traditional retail business loan at your local bank. This strategy gives you time to fix your personal credit and business credit. Keep all your receipts, in order to prove the alternative business loan was used for working capital.
- If you need immediate cash for your expansion, project or an IRS lien before restoring your personal credit and business credit, make sure the alternative business loan does not have any pre-payment penalties. If you used the alternative business loan for a sales tax lien, it is a toss up to absorb it with an SBA 7a loan, since most SBA lenders do not bend on absorbing a sales tax lien debt.
What type of Alternative Business Loan Will Work for My Business?
Some alternative business lines of credit start as low as 4.99%, that depends on the overall application of the business, which includes factors like your personal credit, your business credit score, and your debt service ratio, the best advantage to this type of loan is that it does not have a pre-payment penalty. Even though it is not a SBA loan, some alternative lenders use the SBSS model to help them make a sound underwriting decision.
If you applied for a small business loan at your local bank and did not get approved, then I would suggest a an alternative small business line of credit. Again, these types of loans will give you time to fix your personal credit and business credit score , later refinance out of the alternative business loan with an asset based loan, SBA or simply paying it off with cash.
What Rules do Alternative Business Lenders have versus Traditional Banks?
We prefer credit scores starting at 625. An alternative business lender will close your loan in 5 business days or less. A traditional bank loan is long term, they will provide you with better rates and terms as long as your credit and debt service ratio meets their guidelines. A traditional retail business lender will close your business loan within 30 plus business days. With both alternative business lending and traditional retail lending, credit and cash flow are key.
For more information on how we can locally help you with alternative business lending, in Estero FL and Fort Myers FL and Bonita Springs FL please fill out the online contact form about your concerns or give us a call at 239.2604602. Read what our valued clients have to say about First Pro Capital and Credit Consulting Experts on our Testimonials page.