Is Alternative Lending The Right Way To Overcome Cash Flow Problems For Small Businesses? Let’s Find 0ut.
Surveys have shown that only about 50% of the companies make it to their 5th anniversary! And the most common reason is a lack of market demand (42%) followed closely by reason number 2 – lack of sufficient capital, which accounts for 29% of business failures. Now lack of demand is an inherent problem that is difficult to be fixed, but one would think that getting hold of money shouldn’t be a problem in today’s evolved financial market. Unfortunately, that’s not the case!
When it comes to getting funding from banks or credit unions, the odds are stacked very much against small businesses. The banking business model is geared toward funding larger enterprises that are considered more profitable and less risky. This means that small business owners have very little chance of getting approved for a financing deal – and if they have poor credit ratings or cannot put up collateral, then this little chance becomes a big fat zero!
So what do small companies struggling with cash flow problems do? Where do they find funding for operations or expansion?
The last decade has produced one excellent option for SME owners – the alternative financing industry. The alt-fin sector grew in the aftermath of the 2008 meltdown when small businesses suddenly found themselves frozen out of the credit market. They filled the sudden funding gap faced by SMEs and, over the next 10 years, expanded along with their clients. Today the total transaction value in the alternative lending segment amounts to US$33,513.5m.
Why is alternative lending perfect for businesses dealing with cash flow issues?
One of the biggest financial problems small businesses face is a sudden dip in cash flow. Most small companies don’t have vast cash reserves, and a change in revenue (from illness, global market changes, or consumer behavior) can lead to a severe liquidity crunch that can leave them crippled for a long while. Here the need of the hour is to keep running the business till things normalize and money starts flowing again.
In this situation, alternative lenders (like the New York located Mantis Funding) can make the difference between staying in business or going under! A bank would never lend under challenging situations, but an altlender would do so with ease and speed.
Easy, No-fuss Funding After the waiting, the paperwork, and the morale-busting questions on FICO scores at the bank, an alt-lender comes as a breath of fresh air to most small business owners. Alt-lenders like Mantis Funding reviews funding applications with minimal paperwork. They don’t base their entire approval process on FICO scores; rather build a more complete picture of their client’s financial health through other forms of digital transactional data.
Fast Funding Alternative online lenders are also able to provide funding much faster as compared to other sources. Small businesses in need of quick capital will find a sympathetic partner with lenders like Mantis Funding who review applications and transfer money in less than 2 business days.
For small companies in a tight spot, an altlender provides a quick and straightforward way to alleviate their problems. And after the business is back in the green, they can also be tapped for larger amounts to fund growth. The fair, fast, and flexible funding services of altlenders can become great support through all the stages of a company’s growth!