Expanding your Business: Business Loans vs. Bank Financing

loan-company-vs-banksLet’s say you’ve established a decent customer base, and you’re on your way to expanding your business.  Expansions may entail costs higher than your existing capital. For cases like this, your best option would be to get a business loan.

Usually, business owners go the traditional route, i.e. bank financing, when funding an expansion or other investments.  But banks are not the only source of necessary funding to aid your business’s growth.  Non-bank institutions, such as private lending companies, can give you the same financial services. In some cases, the interest rate could be higher but is offset by other benefits that are certainly worth exploring.  Here are some of the reasons to consider business loans from non-bank lenders:

Less stringent requirements

Generally, bank loans are more difficult to acquire.  Most banks will require an established credit standing from the business owner, on top of a business plan, comprehensive financial statements, and a long list of evidences to prove the legitimacy of the business. If your business is new, it’s possible to not be able to meet some bank requirements too.

Non-bank lending companies, on the other hand, won’t let you go through the same trouble to get a loan for your business. A simpler application process will be in place with much fewer requirements.

Speedy process

Your bank loan application will go through a long process before finally getting approved.  And that’s just the tip of the iceberg.  Once your loan gets approved, you’ll have to wait for a week or two to get your funds.

Non-bank business loans will often guarantee faster loan decision in as early as 7 days upon approval and possibly a loan release within 24 hours of the agreement—perfect for cash cycle emergencies.

Flexible payment policies

Unlike bank loans, non-bank lending companies allow you more flexible payment options.  You can choose the length of loan term (short or long term), and may even earn rebates when you pay ahead of schedule.

No collateral necessary

Non-bank lending companies, too, can offer non-collateral business loans, which are much easier to obtain than secured business loans.

They believe in your growth potential

Risk averse banks will usually reject your application for business financing, should they find out that you don’t have an established, tried-and-tested credit history. In this case, non-bank lenders can be the business financing option you can turn to.

While banks may lend to institutions like Ayala and Globe, private lending companies specialize in helping the “small guys” grow to become the next big guy in an industry.

With these presented points, evaluate your business needs first. It’s always a case to case basis. Sit down with your team and try consulting with an expert to determine if a business loan from a lending company is truly a better option for you.

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