This post is a revised version of an article originally published on Forbes by National’s CEO, Joe Camberato. To view the original article, click here.
Whether you’re working through a difficult stretch or gearing up to take on a new opportunity, the biggest challenge you face as a small business owner is probably obtaining capital. Fintech lending, also called alternative lending, has helped simplify and streamline this process, giving small business owners new options.
In years past, getting capital meant going to the bank, applying for a small business loan, and receiving funding in a few weeks or months.
But with today’s fast-moving business world, waiting more than a week isn’t a realistic option. Most business owners need funding to pursue new opportunities right away.
In recent years, the fintech lending industry has gained momentum. Now, many emerging fintech companies can provide small businesses with the same resources that, initially, only traditional banks held. Specifically, they can also provide SBA (Small Business Administration) loans.
But instead of sky-high credit standards, or demanding collateral, fintech companies focus on the potential a small business holds for the future.
If you’re seeking capital to grow or resolve challenges, then the fintech lending process may be confusing—at first. However, with fewer regulations and dedicated advisors, the overall time to funding is much faster, and requires far less documentation.
If this is your first time taking advantage of fintech lending, here’s what you need to know.
Life moves faster today, and the business world is no different. If you need funding for your small business, then you probably need it right away. Fintech lending can help you accomplish that.
At a bank, you’d have to wait around while your application is considered. Even with perfect credit, there’s rarely a fast-track to receiving financing. And, a seemingly perfect application could still result in a rejection. From start to finish, this period could last between weeks and months.
Through taking advantage of the fintech lending market, you can receive your options in just minutes. Often, you can receive funding on the same day (at National, we can get your business funded in just a few hours).
With speed on your side, you have the ability to quickly decide how to proceed.
While waiting to hear about your bank loan application can be exhausting, applying can also be a nightmare.
Banks generally request the full nine when it comes to documents. From profit/loss statements, to balance sheets, and even personal financial statements, you’ll have to provide everything. Just gathering updated documents can take hours of your time.
In the small business lending fintech world, though, the process is easier and more straightforward.
Most small business lending fintech marketplaces will request only the essentials. You’ll generally receive a pre-approval based on your credit score and annual sales. Then, lenders may confirm your financials based on bank statements and tax returns.
Larger requests and economic downturns may cause banks to request even more documentation. However, this is on an as-needed basis only.
When financial technology companies first hit the scene, many business owners were skeptical. After all, with the faster approval timelines came a disadvantage: higher interest rates. As fintech companies have evolved and become mainstream, though, this interest rate gap has disappeared.
Now, fintech companies offer competitive market rates for highly desirable financing programs. When you consider the new opportunities you can pursue, it’s even less significant.
In addition to challenging credit histories, collateral requirements often prevent small businesses from qualifying for bank loans. This is especially true when the amount requested is above $100K.
Even if they’re applying for working capital, many small business owners don’t have collateral (like real estate, business assets or personal property) to put up. But with fintech marketplace lending, collateral requirements aren’t a limitation.
Generally, fintech lending platforms offer programs in which you can qualify for financing without hard assets. That being said, putting down collateral may help you qualify for higher amounts or better terms.
You’re probably focused on obtaining financing now, but remember: your business may need funding again in the future. For time-strapped business owners, another huge advantage of fintech lending is the simplicity of additional fundings.
When you work with a fintech lender, you’re starting a relationship. If you make payments on time, then you may have an easier time qualifying next time you’re in need of financing.
With banks, you won’t receive the same treatment. Even if you’ve paid off two bank loans in full, you’ll have to apply through the normal process. Banks don’t offer a quick, simple and easy process for previous clients to receive new financing as they come across new needs.
Fintech commercial lending companies, on the other hand, will provide you with your new options right away. After receiving them, you have the choice to accept or decline the offer.
Why wait for bank financing options when you don’t have to?
At National, we know that speed and simplicity are the name of the game when it comes to getting your business financed. As experts in both fintech and lending, you can get your business financing while knowing that you’re taking the right steps forward.
Through our 75+ lender marketplace, we can help you obtain the best financing rates, terms and amounts.
Once you apply, you can get your financing options in minutes, and your business funded in just a few hours.
Apply now to get the ball rolling and learn what you can qualify for!
National Business Capital is the #1 FinTech marketplace offering small business loans and services. Harnessing the power of smart technology and even smarter people, we’ve streamlined the approval process to secure over $1 billion in financing for small business owners to date.
Our expert Business Financing Advisors work within our 75+ Lender Marketplace in real time to give you easy access to the best low-interest SBA loans, short and long-term loans and business lines of credit, as well as a full suite of revenue-driving business services.
We strengthen local communities one small business loan at a time. For every deal we fund, we donate 10 meals to Feeding America!
Matt Carrigan is the Content Writer at National Business Capital & Services. He loves spending every day creating content to educate business owners across every industry about business growth strategies, and how they can access the funding they need!