Why Alternatives to Bad Credit Business Loans Are Here to Stay
An alternative to a bad credit business loan refers to a source of capital that small businesses can access, even if they have poor credit scores or other issues that would typically prevent them from getting approved for external financing. What is the importance of alternatives to traditional loans? At first glance, having multiple options for financing a small business outside of what is offered by traditional banks seems redundant. Business owners who are even aware of other options may be wary of them, as outside of the realm of a bank loan there are many different products and entities, some more beneficial for small businesses than others. However, when it comes to the question of whether or not these alternative capital sources are important, consider this; the average 7(a) loan amount in fiscal year 2012 was $337,730. Why is that significant? Because it demonstrates an important reality related to small business lending. The fact is, many of the enterprises we typically think of when we think of small business lending, including brick and mortar retail stores, local restaurants and other mom and pop style businesses often are unable to apply for loans that size based on their monthly sales or because they are restrained by a bad credit score. This means that outside the realm of what the SBA is able to provide assistance with, there are many businesses that still need financing options.
Alternatives to bad credit business loans are quickly becoming ubiquitous in the US, as poorly timed events like the government shutdown highlight the importance of quickly accessible credit sources for small businesses if they intend to weather the rocky economic times that we are still coming out of as a nation. By establishing a strong relationship with an alternative credit house, businesses can maintain a lifeline that can get them capital in the even of lost sales or unexpected expenses, protecting their already fragile credit and allowing their business to expand its revenue streams going forwards.
It is important for business owners thinking about these bad credit business loan alternative to do their homework. Identifying a capital provider that focuses on the viability of a business in the long term rather than one that is ready to provide financing that may harm an enterprise should be a major concern for small business owners who want to investigate these options. That being said, many small business owners are still unaware of the growing availability of financing options outside of traditional bank loans, and may find that there are products designed to help them in their sensitive economic situations after being turned down for multiple funding applications. It is because of these cases that the alternative financing market shows no signs of flagging growth, and is poised to become even more nationally important in 2014.
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