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The internet revolutionized how we do business, including financing. Traditional lenders like banks and credit unions are no longer the only options for small-business owners. This is where alternative financing providers come in. These online platforms are eager to fund your business, but what sets them apart?
“To start, the application process is typically straightforward; there may be a requirement for documents like bank statements for approval. Unlike traditional banks that can take up to weeks or months to approve and disburse loans, alternative financing providers can provide funding within days, helping you seize opportunities,” said Credibly Co-Founder Ryan Rosett.
That’s only the beginning. In this blog post, we’ll explore how alternative financing providers support small businesses, the types of alternative financing they offer, and some snapshots of how businesses have succeeded when they’ve financed with Credibly.
What is alternative financing? How does it support small businesses?
Typically, traditional bank loans and SBA loans are common ways small businesses secure financing. Now, alternative financing offers a broader range of options beyond conventional banks and credit unions.
Many of the best small business loans come from alternative financing providers, providing flexibility and fewer credit requirements.
Plus, there are additional upsides. Here are just a few of the advantages of working with an alternative financing providers, especially for small businesses:
- Easy application process: Say goodbye to complicated paperwork. Alternative financing providers typically have a straightforward application process. Often, all you need to get started is access to your digital bank statements.
- Flexible financing: Alternative financing providers aren’t confined by rigid banking regulations, and can offer a variety of creative financing solutions. Whether it’s working capital loans, long-term-loans, or other unique products, they tailor options to meet business needs.
- Fast approval: Need funds fast? Alternative financing providers offer quicker turnaround times. Unlike banks that can take up to weeks or even months to approve and disburse loans, alternative financing providers can often provide funding within days.
| Pro tip: You have a greater chance of getting approval for financing from an alternative financing provider.
Only 13.8% of small business loans get approved by large banks. Smaller banks have a slightly higher approval rate of 19%. Meanwhile, alternative financing providers approve 30% of loans. |
Types of alternative financing
Alternative finance providers offer several different competitive, flexible financing options, each with its own unique benefits. Here’s a quick rundown.
This option allows businesses to sell future receivables for immediate cash. The advance is satisfied through a percentage of future sales, making it a flexible solution that focuses on business performance rather than credit scores.
Offering high limits and lower interest rates than credit cards, a business line of credit provides the flexibility to manage cash flow and fund growth initiatives. However, securing one may require collateral.
| Did you know?
Source: Business Insider |
- Peer-to-Peer (P2P) lending:
Conducted through online platforms, P2P lending connects businesses with individual investors. This bypasses traditional banks, allowing for flexible terms and direct negotiations, though it comes with fewer borrower protections.
This involves selling unpaid invoices to a lender at a discount for immediate cash. It helps maintain cash flow when customers are late on payments. Variants include invoice financing and invoice discounting, each offering ways to manage receivables effectively.
Designed to cover day-to-day expenses, these loans provide quick funding to manage operational costs, especially during periods of low cash flow. While offering flexibility, they require regular repayments, so businesses must ensure they can meet these obligations.
It’s clear that these options provide businesses with the flexibility and speed they need to thrive. But how do these financing solutions work in real-world scenarios?
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How businesses have excelled with financing from Credibly
Here’s how small businesses have turned challenges into growth opportunities with Credibly’s flexible financing solutions.
Restaurant: From dream to reality
Snackboxe, a full-service restaurant established in 2021, brought Southeast Asian flavors to its local community. The owner, inspired by a family background in the restaurant industry, had long dreamed of starting their own eatery. After three years, it was time to expand. The owner needed funds to upgrade equipment, hire additional staff, and close prior high-interest loans.
After being faced with rising ingredient costs and supply shortages due to inflation, the owner saw an opportunity to improve efficiency. Investing in new deep fryers and an automatic dishwasher, they aimed to reduce overhead costs and boost output, ensuring consistent quality. As revenues climbed, hiring and training new staff also became a priority.
The restaurant’s point-of-sale system offered working capital financing, but high interest rates were a deterrent. Turning to Credibly, the owner found a more favorable solution. Impressed by the ease and speed of the process, they secured the needed funds in just three business days.
Fast funding, real results.
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B.A.B.E Wholesale Co and Two Saved Sisters Boutique: From boutique beginnings to a bright future
Callie and her sister, Chellsie, launched Two Saved Sisters Boutique in 2016, providing stylish and affordable clothing both online and in-store. The pandemic in 2020, however, disrupted their supply chain, severely impacting their operations. With 90% of retail owners facing similar issues, as per a Statista survey, Callie saw a significant need for reliable sourcing.
In response, Callie established B.A.B.E Wholesale Co to supply quality materials to other boutiques. What started as a solution to a crisis has now grown into a business serving over 7,000 boutiques across North America.
With trade shows being crucial for retail networking, Callie aimed to showcase B.A.B.E. Wholesale Co. However, the upfront inventory requirements were beyond their usual needs, necessitating additional financing.
During her search for short-term financing, Callie encountered many finance providers with grand promises but little understanding of her business. Trust was a major issue until she discovered Credibly. Impressed by their collaborative approach, she decided to work with Credibly’s financing experts.
With Credibly’s support, Callie secured the funds needed to prepare for the trade show, ensuring her business could take full advantage of the growth opportunities.
Callie’s journey with Credibly highlights the importance of finding a financial partner that understands your business needs and goals. We are proud to have played a role in her success, providing the collaborative approach and expert guidance necessary to seize new opportunities and drive growth.
Ready to supercharge your business with flexible and fast financing?
Alternative financing can be the key to unlocking your business’s potential. Don’t let traditional bank hurdles hold you back.
