In a country where nearly one third of businesses fail due to a lack of cash flow, small business owners must understand the funding options available. The world of small business financing has experienced a significant shift in recent years, with traditional banks becoming more stringent in their lending practices. According to data compiled by Fundera, big banks approve only 27.7% of loans requested by small businesses. This shift has left many small businesses struggling to secure the funds they need to grow.

However, in response to this challenge, alternative lenders have emerged as a vital source of flexible and accessible funding options, completely changing the game for long-term business plans. Here at Hub Funding Solutions, we play a crucial role in connecting small businesses with these alternative lending options—bridging the gap between financial needs and available opportunities.

Traditional banks, which once served as the primary funding source for small businesses, have tightened their lending standards, making it increasingly difficult for entrepreneurs to access business financing. Their demanding credit requirements, long application processes, and collateral demands have left many small businesses underserved and in search of alternatives.

To meet this growing demand, alternative lenders have stepped up to provide innovative financial solutions. These lenders use diverse underwriting models that consider a broader range of factors, beyond just credit scores, to assess a business’s financial health and potential. Additionally, assistive technologies, like the ones that we use at HFS to connect loan applicants to online lenders, can simplify the application process.

Flexibility in loan products

Alternative lenders offer an array of loan products to cater to various business needs. Whether it’s a short-term working capital loan, equipment financing, invoice factoring, or a merchant cash advance, these lenders provide more adaptable options that can be tailored to meet the unique needs of each small business. For instance, smaller loan amounts and shorter-term loans are less accessible when dealing with larger financial institutions. While alternative loans might come with higher interest rates, this trade-off is justified by the flexibility they offer. Entrepreneurs are empowered to secure funds on their terms, without being hindered by strict requirements.

Streamlined application and approval processes

Unlike traditional banks with their bureaucratic loan approval processes, alternative lenders have embraced technology to simplify application and approval procedures. Whereas a bank loan typically takes 30-45 days for approval, online platforms and advanced algorithms enable small businesses to submit applications swiftly and receive decisions within days, or even as fast as 24 hours! This provides a critical advantage for those facing urgent financial needs or time-sensitive opportunities.

Collateral options

Traditional banks often require borrowers to provide significant collateral to secure a loan. This collateral might include valuable property such as real estate, vehicles, machinery, or even accounts receivable. Banks do this to reduce their risk—if the borrower cannot repay the loan, the bank can take possession of the collateral and sell it to recover the loan amount.

Alternative lenders, on the other hand, may offer options that don’t require borrowers to provide substantial collateral. They might provide collateral-free loans, which means the borrower doesn’t need to pledge any specific assets. Instead, the alternative lender might evaluate the business’s cash flow, revenue projections, or other factors when determining loan eligibility.

Access to funding for businesses with challenging credit profiles

One of the most significant benefits of alternative lenders is their willingness to work with businesses that may not meet the stringent credit requirements of traditional banks. By evaluating other aspects of a business’s health and potential, these lenders make funding more accessible to a broader range of entrepreneurs.

Industry-specific financing

Some alternative lenders specialize in specific industries, which means they understand the unique financial requirements and challenges faced by businesses in those sectors. This expertise can be advantageous for businesses seeking specialized funding solutions.

For instance, a lender specializing in the hospitality sector could offer tailored funding options for hotels and restaurants, accounting for their fluctuating cash flow patterns. Similarly, a lender focused on the technology industry might provide startup-friendly loans that align with the rapid growth trajectory of tech companies. This targeted approach ensures that businesses receive financing solutions finely tuned to their sector’s demands, facilitating their growth and success.

Hub Funding Solutions, a prominent intermediary in the alternative lending space, empowers small businesses by connecting them to non-traditional funding sources. As a conduit rather than a direct lender, we work closely with entrepreneurs to understand their unique challenges and assess their specific requirements. By using advanced technology and our online platform, applicants can easily submit their information and connect with suitable alternative lenders promptly.

Throughout the process, we maintain transparency regarding terms, fees, and repayment schedules, ensuring that borrowers fully comprehend their financial commitment while accessing funding solutions tailored to their individual needs.

As the financing landscape continues to evolve, small businesses can rely on Hub Funding Solutions to guide them towards the right alternative lending opportunities for their unique financial needs. If you and your business are ready to secure some cash, submit an application today!