As a small business owner, you know that most small businesses don’t survive their initial years of operation. Although there are many reasons for this, one of the most common ones is funding. A financial setback can hit any business, but it can be particularly challenging for a vulnerable small business with limited cash flow.
In a tight spot, it can be difficult for a small business to get funding from a traditional source like a big-name bank. Not only do such financial institutions have steep requirements but they can take over six weeks to process and approve an application.
That’s why many “small owners” like yourself are turning to alternative funders for help. These funders are usually more friendly to small businesses. However, it’s important to find the right source to avoid new challenges. Here are a few signs of the right alternative funder:
#1 They’re Reputable
Only trust a reputable alternative funder for reliable funding solutions. For instance, SharpShooter Funding has been helping small Canadian businesses for years with fast smart funding solutions and world-class services. Their honest and customer-focused services have earned them an excellent reputation with great feedback from customers, features in reputable publications such as Forbes, National Post, and countless five-star reviews on Loans Canada. They also approve 75% of the applications sent their way.
#2 They Have Integrity
It’s important to partner with an alternative funder that’s open and honest about its terms. For example, some shady funders can trap desperate small business owners in debt cycles with predatory interest rates on Merchant Cash Advances (MCA). They’re able to do so because MCAs are usually almost completely unregulated.
An MCA can be an excellent option that’s in a short-term cash crunch, has credit issues, and needs a fixed-price loan based on a percentage of its future sales. However, from the wrong source, an MCA can come with unfair terms and conditions and be as problematic as a payday loan to a regular citizen.
Regardless of the type of funding you seek, partner with an alternative funder that is open and honest about all terms and conditions. If the interest rates aren’t clear or appear astronomical, then move on.
#3 They’re Fast
One of the biggest advantages of applying for funding from an alternative funder instead of a big-name bank is the fast processing time. The right alternative funder will boast high approval rates and process your application quickly. What’s more, they’ll provide the funds in a few days.
#4 They Care
Be wary of funding sources that are out to make a quick buck. Such funders may take advantage of your situation or be unable to provide extra support. The right alternative funder realizes the value of small businesses to the economy.
They keep the country moving by providing important local services, diversity, meaningful local employment, tax dollars and more. They also keep the giant corporations at bay by nipping at their heels. If big businesses didn’t have competition from small ones, they’d be less motivated to lower prices.
Because small ones can’t compete with bigger companies on price, they focus on creativity and great customer service. Many of the household products we use today came from the innovative mind of a small business owner.
As a small business owner seeking alternative funding, partner with a funder that understands your value and is passionate about supporting small businesses.
#5 They Don’t Use Traditional Metrics
One of the biggest reasons why they are rejected by conventional funders is because they can’t measure up to traditional financial metrics. For example, a big-name bank may ask for an excellent business credit score, strong cash flow position, years of experience, a long history of profitability, and collateral before approving your application. Many small businesses wouldn’t need to apply for funding if they already had those characteristics.
Partner with an alternative funder that doesn’t rely on traditional financial metrics, and instead evaluates your business’s overall health and growth potential. Work with an alternative funder that analyzes it and offers a type of funding that matches your goals and strengths.
A good online funder will try to approve funding even if you don’t meet traditional criteria. For example, if your business lacks a good credit score, then they may approve funding based on your personal credit. If you lack good personal or business credit, then they may offer a Merchant Cash Advance (MCA) with fair terms, which won’t affect your credit.
If your business isn’t healthy enough for a long-term loan, then they may encourage you to accept a smaller one to meet your immediate requirements and repay it quickly to rebuild your credit. Alternatively, they may approve a loan on your assets. With the right alternative funder, there are many paths to approval based on the merits of your company.
#6 They Offer Multiple Funding Options
With the right alternative funder, you should have multiple funding options based on the needs of your business. For example, the right alternative funder will provide short-term loans, long-term loans, bridge funding, merchant cash advances, commercial funding, business expansion funding and more. On the other hand, the wrong funder will only offer a few types of funding, forcing you to accept a less than ideal plan.
#7 They Serve a Variety of Industries
The right alternative funder should be experienced in serving a variety of industries. Their unique insight will help them give your business the sort of support it needs. Some small business industries that need alternative funding including health care, retail, wholesale, automotive, food, construction, beauty, fitness, restaurants, cafes, electricians, landscaping, plumbing, taxi, painting, roofing, daycare, self-storage, catering, alcohol, and more.
As a small business owner in need of funding, an alternative funder can prove to be the lifeline that you need. By taking the time to find the right one, you can improve your business’s chances of thriving in the future.