Working from home is one of the most wonderful things – you get to do what you love from the comfort of your own home! But with all its ups, of course, comes its downs – one major ‘down’ is how hard it is to get a business loan! In this article, I talk about why banks decline your application so often and why should look into alternative finance lenders.
Getting that ‘Yes!’
Are you sick and tired of hearing ‘no’? Australian Bureau of Statistics data indicates that small business loan applications are rejected at an estimated twice the rate of larger businesses. One of the main reasons small businesses get turned down for a loan is a lack of collateral.
Extending your services = more capital
Even if you’re a home based operation, when you want to expand your service range by perhaps hiring more people; investing in newer, updated equipment; building a bigger home office etc.; whatever it is it means you’re going to need more money. Borrowing from family and friends comes with the risk of damaging personal relationships; crowdsourcing might not suit the type of business you have (not to mention it can be administrative nightmare); using your credit card means paying high-interest rates, not having a clear idea of the cost, plus compounding interest and not always being able to access sufficient money; and finally, the big banks almost always require property security for a loan, and do you really want to risk not just your business but your home? But that isn’t actually the final option, you could go for a loan via an alternative finance lender.
Time is money?
You know the old saying, time is money and accessing bank finance for small businesses can be extremely hard because they don’t have much real estate assets, extensive credit histories or a long, proven track record. Banks can take ages to evaluate loan applications. But an application to an online lender could be approved within hours and the funds in your bank within a day or two – which could mean the difference between seizing a game-changing opportunity and missing out to a competitor.
A personal look
As a writer, working from home gives me the flexibility to work when I want and I want the same sort of flexibility in the loan I take out. Many online finance lenders give you the ability to structure repayments to suit your cash flow. This feature is great so that even on a “low performing” month, I can keep my head above water with my loan.
We live in an increasingly technological world. Fintech (aka alternative finance companies) have the ability to process business loans faster and innovative solutions that connect with eBay or Xero plugins, for example, so that small business owners are able to access funding in real time, certainly making it much easier to prove your ‘business growth’ case. For the big four banks, it’s very black and white, they tend to stick between the lines and don’t look at individual circumstances – but alternative finance lenders with access to more info can truly look at every aspect of your business, that you’re willing to share of course.
Shaun McGowan, CEO of popular business loan comparison site Lend says “just like booking a flight, it pays to compare the different business finance products and associated interest rates”.
So if you’re planning to take out a loan, remember you have options. Make sure to review the pros and cons of each before making an application and consult a professional
About the author:
Camille Storms is freelance copywriter and storyteller, she writes for all kinds of industries and loves to learn the ins and outs of businesses – big and small.