If you've had issues financing your franchise, you're not alone. Like any business owner, you need money to take care of everyday costs like paying property taxes, meeting payroll, or purchasing inventory and equipment. But what happens when you walk into a bank and are denied funding because of a low credit score or insufficient collateral?
This is a problem all too common for business owners these days. Following the recession of 2008-2010, government regulations forced banks and other lenders to significantly tighten their requirements. These restrictions effectively shut out many businesses from acquiring funding.
So what can franchisees do to receive the funding they want? The answer lies within alternative lending.
Since the financial crisis, alternative lending companies have begun to take the place of more traditional lending options. While you may struggle to meet the requirements for a bank loan, it's a different story with alternative lending. Issues commonly affecting business owners for bank loans--such as credit score and collateral--do not factor in to the alternative lending process.
Let's take a look at common issues that arise for business owners and how alternative lending alleviates them:
Poor credit: Ah...the dreaded credit score. Normally, a bank will show you the door if your credit rating isn't hovering around at least 700. However, this isn't the case with alternative lending. Alternative lenders generally do not take personal credit history into account during the evaluation and lending decision processes.
Insufficient collateral: Banks will always want some form of collateral when lending money. Usually, the collateral will be tied to property, such as a mortgage. To be eligible for alternative lending, collateral is not a necessary component, unlike a bank loan.
Application Time: When applying for a bank loan, there's no telling when you will get approved for funding, if ever. A major benefit of alternative lending is that you can find out whether or not you're approved almost instantly. Many alternative lenders have embraced online applications that approve funding for business owners in seconds.
Getting the money: Expansion, renovations, advertising, marketing...the list of immediate needs facing your business goes on and on. The bank loan process is notorious for being dragged out and old fashioned, while an alternative lender's aim is to get business owners money as soon as possible. Similarly to the quick application process, actually getting the money in your account happens very quickly. Often, you can receive the money in less than a week.
Look no further than alternative lending if your franchise could use some extra cash flow to boost business no matter the season. Approval rates are high, funding is quick, and the process is much simpler than going to a bank.
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