There’s one thing all businesses, regardless of size or industry, have in common -- they all need money to be able to exist and grow. How, exactly, they go about getting the funds they need can vary from business to business, though. Some might go the conventional route of getting a bank loan, others might seek out investors, and others might try alternative financing.
Alternative financing is different from a loan you would get from a bank. You can get alternative financing through things like a merchant cash advance or accounts receivable financing, which aren’t actually loans. Unlike bank loans, alternative funding is a type of short-term funding which is meant to be repaid rather quickly. So, what types of benefits does alternative financing have to offer over other types of funding?
In many cases, when a small business owner needs money, it’s because they need the money to cover an urgent need like making a repair, replacing an important piece of equipment, or replenishing inventory after fulfilling an unusually large order. Spending hours upon hours of their time filling out the complicated, detailed paperwork that comes along with getting a loan from a bank simply, then having to wait to find out if they’ve been approved just isn’t a practical solution. On the other hand, by using alternative funding, business owners are able to get the money they need right away.
Better Odds of Being Approved
If you’ve ever tried applying for a business loan at a bank when your credit score isn’t so great, you know how hard it can be to get approved. But alternative funding providers like Yellowstone take several different factors into consideration that banks don’t so we’re better able to get a clearer picture of how your business is currently doing. Your credit score is still a factor, but we don’t put the same sort of emphasis on it that banks do. This way, we’re better able to help growing businesses stay on track, even if their credit score isn’t perfect.
When you get a loan from a bank, part of the application process involves explaining, in great detail, what you need to use the money for. Banks are typically more inclined to make loans for making important investments or reaching long-term business goals. They might not be as interested in giving a loan to a business who just needs some extra working capital so they can cover some day-to-day business expenses and get past a temporary hurdle. But things like merchant cash advances can be used to cover a huge variety of business expenses. Pretty much the only thing they aren’t typically used for is making big purchases like real estate and that’s due to the short-term nature of the funding.
The key benefit to using alternative funding is that it allows business owners to get the money they need to keep their businesses going strong even when faced with a temporary bump in the road. The business owner is able to keep going strong even when faced with a temporary setback. Business owners can get the money they need with little hassle so they can put their time and energy back into the business.