28 September, 2018

Direct Business Lending

Direct business lending involves financing that is made available directly to the business without the participation of a third party. Through direct lending, the borrower is given greater discretion in making loans. Difficult bank loans Loans for running a small or medium sized business and working for its growth require capital. The process of loan approval has always been tedious and time-consuming as well as complicated requiring lots of paperwork. Obviously, it is not the best option for small businesses that need to secure more financial capital quickly. Rigid bank […]

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Direct business lending involves financing that is made available directly to the business without the participation of a third party. Through direct lending, the borrower is given greater discretion in making loans.

Difficult bank loans

Loans for running a small or medium sized business and working for its growth require capital. The process of loan approval has always been tedious and time-consuming as well as complicated requiring lots of paperwork. Obviously, it is not the best option for small businesses that need to secure more financial capital quickly.

Rigid bank requirements

Banks, being the business institutions that they are, look for bigger ROI and profits. For them, the returns of granting loans to a small business is minimal compared to lending to a multi-million dollar loan to a large corporation. For this reason, loan applications for small businesses are seldom granted by banks.

Welcome direct business lending!

For some reasons, small businesses have no opportunity for alternative financing growth of their companies. Here comes direct business lending with its array of alternative financing that makes loans available. Consequently, it is becoming more popular with small business. Lending in direct business provides loans or financing available directly to the business and does not require a third party. It offers lenders greater privacy in accessing loans. Another favorable development is that direct lenders and other alternative finance companies have used the internet to reach small businesses that are looking for them.

Direct business lending benefits:

  • No discrimination – Freedom to apply no matter what size your business is.
  • Time-saver –
  • Save on paperwork – Not required submission of financial documents or tax returns.
  • No third party involved as credit references are not required.
  • No collateral is needed.
  • Poor credit history is Ok, as it does not affect the application.
  • You have flexible payment options.
  • Fast funding amounts from $10,000-$500,000.

Misconceptions about small business direct lending

As small businesses are becoming popular, small business loans in America are increasing. Business lending, in general, has many common misconceptions.

  • Misconception 1- Banks are your only option.
    Banks are considered the only source and most well-known services for loans since the beginning of time. However, there are different financing methods are out there too.
  • Misconception 2 – The SBA is a direct lender.
    The Small Business Administration (SBA) is not a direct lender but a government guarantee program working with banks to caution the risk of losing funds and help small businesses secure bank loans.
  • Misconception 3 – you can only access small business lending if you have perfect personal credit. For credibility, they scrutinize the length of time you are in business, your daily account balances, and your monthly minimum deposit.
  • Misconception 4 – Asking for a large amount lowers chances of approval.
    The amount isn’t the be-all, end-all of your approval chances. Other factors for your business loans considered are collateral and current cash flow etc.
  • Misconception 5 – Only businesses on the brink of collapse apply for loans.
    Businesses of any status may qualify for financing. It has been observed that many businesses that are highly successful depend on external financing.

Signs of a legitimate business lender

Scammers can fake legitimacy in direct business lending using different ways, but there are always signs to look out for.

ü The company has a legit name and you have spoken to its valid representatives.
ü The company has a certified state license number, public phone number, and physical address.
ü Anything that doesn’t match up is a red flag.
ü Check that license number, name of the company, physical address, and the phone number are legitimate.
ü Call the phone number to verify that it is a legit company you are dealing with.
ü Search the company’s name online and look for any scam warnings, feedback or alerts.

Loan purpose

Potential lenders like to know the purpose of the loan purpose to help them identify the type of loan suitable for business owners and what they are looking for. For example, there are specific loans designed for purchasing equipment, buying a franchise, or a commercial real estate.

Loan purpose can also help identify business loans whether a long-term or short-term loan would be suitable. In the same way, most small businesses wouldn’t consider buying a new vehicle attached to a mortgage of 30 years. There are some other types of loan for buying inventory.

What to do it your business loan is denied?

If your small business loan is denied, there are other options to consider:

  1. Take out a personal loan that you can spend on whatever you like, including business-related costs.
  2. Get a business credit card as it may be a good option for a small business loan. However, bear in mind that the interest rates tend to be much higher.
  3. Apply for a small business grant available to small business owners.

Go for direct business lending

Direct Business Lending is a unique solution for small businesses and entrepreneurs, guiding them through the lending process or seek small business, personal credit. It can be the best option if you need extra funding to move your business forward.

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