Funding is crucial to SME growth. If you need to boost your credit scores so to be eligible for better funding, you can work on building credit via alternative lending options. This article will help you improve your credit and find the right alternative online lender that can help you scale as a business.
Building Credit: Alternative Business Loans and Not Only
You can’t build business credit overnight, but you can take the right steps to build it faster and more effectively. As you know, the better your credit is, the more valuable financing opportunities you can get for your business.
So, if you aren’t eligible for traditional business funding options, alternative lending is right for you when building business credit. Did you know that alternative lenders approve small business loans at higher rates, namely at 56% compared to 26% by big banks, as one of alternative online lenders reports?
Here’re 4 alternative lending options that can help you build your business credit:
- Business Credit Card
This is a nice option for everyday business expenses.This way, you can keep your personal and business finances separate and further buildyour business credit.Business cards area good opportunity for small businesses who usually use loans and grants.
- Invoice Financing/ Accounts Receivable Financing
These 2 terms are often used interchangeably. If your business gets paid after delivering services/ goods to customers, invoice financing will help you get fast access to capital. The application process isn’t difficult: you’ll just need to provide a minimum of documentation. Remember that invoice financing can be rather expensive, and its payback terms can be rapid.
- Line of Credit
This one isn’t that much different from credit cards. After you’ve got your approval, the funds are sent into your business bank account. You can use them whenever you wish. You must pay back the amount borrowed to reset your balance. Paying on time (or early, if possible) in full can help you with credit building.
The most significant advantage of microloans is that your account gets reported to a business credit agency, thus helping you build your credit. Make sure to pay on time and manage a reported microloan in a due manner. However, you’ll be charged higher interest rates and be required to submit lots of paperwork.
- Online Lending
With a reputable alternative online lender, you can obtain business financing fast and avoid heavy documentation. No matter you’re a new or unique business, or have poor credit, a true alternative business funding provider will approve you more easily than others.
This type of loan qualification requirements aren’t strict and financing options are more than one. Only, the rates and fees are higher, but you can look for the cheapest possible rates in the industry from a respectable alternative online lender.
To sum up, even if you have poor credit, you can still maximize your business credit with the help of an alternative online lending option. Just take the time to study all your options and go with the right one for your business.
Author Bio: As the FAM account executive, Michael Hollis has funded millions by using alternative business loans solutions. His experience and extensive knowledge of the industry has made him finance expert at First American Merchant.