Alternative lending is a term used to describe financing options that are alternatives to traditional bank loans.
More businesses and consumers are turning to alternative lending options. There are many benefits that can be reaped from these types of loans. For example, you might be able to get a loan without even visiting a store.
Rapid Application Process
When consumers and businesses apply for loans, they want to have access to their funds as soon as possible. However, if one decides to use a traditional bank, then this can take a long time. In fact, some banks take several weeks to review an application.
If you choose alternative lending, then you will have access to your funds much more quickly. In many cases, people are able to get approved in just one day. You will be able to get your funds shortly after you get approved.
Less Paperwork Required
Traditional bank loans require a lot of paperwork, which is one of the reasons that they take such a long time to process. Alternative lenders do not require as much paperwork.
In many cases, you can fill out the application and submit all of the information online. This helps you and the lender save time. Furthermore, you may not have to provide tax returns or bank statements.
Get Approved With Bad Credit or No Credit
Credit scores are one of the things that traditional banks take into consideration before they approve you for a loan. That is why many people turn to alternative financing. Alternative lenders look at a lot more than just your credit score. It is a lot easier to get approved by an alternative lender.
In fact, alternative lenders have a much higher approval rate than traditional banks. Only 13 to 20 percent of businesses that apply for a loan with a traditional bank are approved.
On the other hand, 61 to 64 percent of businesses that apply with an alternative lender are approved. This is one of the many reasons that the alternative lending industry is growing.
Get a Loan without Collateral
Many bank loans require that you use your personal or business assets to secure the loan. This can be a risky way to get a loan because you will lose the asset if you cannot pay back the loan.
However, many alternative lenders will allow you to get a loan without collateral.
Flexible Payment Options
The repayment options will be more flexible if you get alternative lending. For example, if you would rather pay the loan back in a few months instead of carrying the balance for years, then you may be able to do that.
You may also be able to extend the loan if you need more time to pay it back.
Lower Interest Rates
The high interest rates are one of the reasons that many consumers and businesses struggle to pay back loans. High interest rates also cause people to have to pay back a lot more than what they originally owed.
If you choose an alternative lender, then you may be able to get a loan with a lower interest rate.