While most small and medium businesses prefer to deal with traditional banks to get business loans, direct lenders can offer a wide variety of benefits for SMEs. Small business owners know the difficulties involved in getting a business loan from a reputable bank or a similar financial institution. The number of SMEs opting for traditional lenders for business loans has declined since the financial crisis in 2008. This isn’t good news for small and medium-size business owners who require financing to keep their businesses moving.
But it isn’t the end of the road. You can always rely on direct lending to get the business loan you require. In fact, a direct lender is a great option for short-term business loans. This article provides five important benefits of working with direct lenders.
1. Easier loan approval
Big financial institutions and banks are not interested in granting loans to small businesses because the returns associated with small loans are not worth the risk for these institutions. Since direct lenders are prepared to take the risk, you can easily get a business loan from a direct lender.
2. Flexible loan terms
The flexible terms offered by direct lenders are favorable to small and medium-size business owners unlike the strict terms offered by banks and big financial institutions. On the other hand, direct lenders are more accommodating when it comes to their interest rates. You have a good chance of securing a business loan with a direct lender if you have a good credit score. Even if your credit score isn’t great, a direct lender will still find a way to work with you.
3. Quick cash release
Time is important for a small business owner who wants to keep his/her business afloat. Big banks and financial institutions will take a longer time to approve and release the cash. Most direct lenders operate their businesses online and will approve and release your loan quickly.
4. No large down payments
Big financial institutions and banks require a huge down payment if they are prepared to give you a business loan. A small business may not have the capacity to make a big down payment when applying for a business loan. A direct lender isn’t the same. They don’t need huge down payments for business loans. Even if some direct lenders require a down payment, it will be reasonable for a small business owner.
5. You can acquire working capital
The money required to fund your daily business activities is known as working capital. Most big financial institutions and banks are unlikely to offer working capital loans to small and medium-sized businesses. That is not the case with a direct lender. They are willing to provide working capital loans to small and medium business owners.
A business can get a business loan as long as they have the ability to repay the loan. But many small and medium-sized business owners struggle to get business loans from big financial institutions and traditional banks. Even if the banks or financial institutions are willing to grant the loan, it may take forever for them to approve the application. The loan terms may also be unfavorable at times. Fortunately, a direct lender will approve and release your business loan quickly. Their loan repayment terms are quite flexible and require little or no down payment at all.
You may also like: How Do SBA Loans Work (and What You Need to Get One)
Image source: Shutterstock.com