Small businesses need to access capital at various stages of their growth for many different reasons. But the prospect of taking out a business loan can be daunting – especially if you’re being asked to mortgage your home to access finance.
But there’s an easier way. Some alternative lenders are backing small business by considering the health of a company to determine creditworthiness, rather than pure asset-backed financing.
Why do small businesses need to access funds?
Many small businesses need to access credit to grow. For some, it could be to purchase new equipment or machinery that will enable them to produce more goods or work more efficiently. For others, it could be to invest in new premises to open another outlet or to enter a new market.
Here’s what you need to know about security and alternative lenders:
What’s the difference between a traditional lender and an alternative lender?
The recent royal commission shone a spotlight onto the banking sector, revealing many problems around traditional lending and how hard it’s been for small businesses to access finance. In this environment, more and more people are considering the prospect of working with an alternative lender to help grow their small business.
Alternative lenders primarily operate online and have turned the process of borrowing on its head – addressing the major flaws in the way the big banks have worked, while genuinely meeting the needs of their prospective customers.
Small business is an agile environment, and small business banking should be agile, too.
Alternative lenders are focusing on speed, flexibility and personal service, combined with a deep understanding of the way small businesses operate, and an absolute focus on creating the right opportunities to enable small business owners to grow their business.
Why should small businesses consider borrowing from an alternative lender?
Rather than being huge corporations, such as the traditional banks, alternative lenders are usually relatively small businesses themselves, so they understand the dynamics and pressures of small business.
Instead of focusing on the business owner’s personal assets, alternative lenders will assess the business itself – its health and its growth potential.
They also typically offer a quick, online application process (rather than hours sitting in the bank talking to a loan officer). Prospa’s smart lending platform uses 450 data points to assess your application, with a decision usually made within the hour and funding possible to successful applicants within 24 hours.
If you apply for a small business loan with Prospa, for example, you can borrow up to $100,000 without having to provide up-front asset security to access the funds. And if you continually meet your loan obligations, security will never be required.
If you need a sum over $100,000 to invest in your company, we also offer business loans up to $300,000, where we take security in the form of a charge over assets.
At Prospa, we understand that small business owners need funding for a variety of reasons. If you are looking to expand, open a new franchise or simply maintain your cash flow during a quiet period, we can help. Get in touch with one of our business lending specialists on 1300 882 867 to discuss your options, or find out more.
The information on this website is provided for general information only and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from financial, legal and taxation advisers. Although every effort has been made to verify the accuracy of the information, Prospa, its officers, employees and agents disclaim all liability (except for any liability which by law cannot be excluded), for any error, inaccuracy, or omission from the information or any loss or damage suffered by any person directly or indirectly through relying on this information.