Direct business lending involves financing that is made available directly to the business without the participation of a third party. Through direct business lending, the borrower is given greater discretion in making 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.
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.
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.
As small businesses are becoming popular, small business loans in America are increasing. Business lending, in general, has many common misconceptions.
Scammers can fake legitimacy in direct businesses 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.
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.
If your small business loan is denied, there are other options to consider:
Direct 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.
Joshua is a financial lawyer who plans on writing a book about his experience on debt collection laws and lending terms and conditions. He is currently one of the senior partners at his law firm but wants to take more time off for his writing.