Why You Should Consider Alternative Financing
Non-traditional lending models often get a bad name in the business community, but a lot of that is negative marketing. While there are serious costs to any form of financing, weighing the benefits helps you understand when a form of financing provides you with unique opportunities. One of the biggest critiques leveled at alternative financing is based on its accessibility, and the assumption that accessible credit is expensive. In truth, your financial health controls the cost of financing as much with alternative lenders as with any other form, and having good credit can streamline a lot of costs. It’s also worth remembering that short-term financing in all its forms is generally more expensive than long-term options, and most alternative programs are short- or medium-term. They need to be compared against loans of similar length for a fair shake.
So what makes alternative lending a great option? Well, with a range of innovative products, you often have the chance to access rates for secured credit using assets that traditional lenders don’t weigh when approving conventional loans. Merchant cash advances provide short-term financing based on your credit receipts, and the payment format flexes with your earnings to stay sustainable. There’s also accounts receivable financing. When it comes to more traditional loan structures, access to hard money options can help you put your large payment commitments in a place where your cash flow is best suited to deal with them. There’s simply more selection to move with.
It’s also worth remembering that accessible alternative financing isn’t a bad thing, even when it is expensive. It’s an option for the companies excluded by traditional lenders, many of which are healthy but small or new. Others have balance sheets that don’t fully reflect the company’s financial health because of momentary circumstances, and then sometimes a business just needs more resources to pull everything back together. Providing that isn’t a net negative, and when an article pretends it is, that’s negative advertising. Access means more companies have the resources they need.
Last but most definitely not least, alternative financing is often suited to an individual industry or business model. That means it’s built to work with you, instead of imposing arbitrary demands on your cash flow. The chance to get the financing you need with the payment structure that best suits your cash flow can be a more powerful tool than simple dollar savings, because outgoing money at the right time can bottleneck your resources in ways that impede your growth.