Although some lending institutions are beginning to relax their loan criteria for small business mortgages, many are still setting financial criteria that small business owners find difficult if not impossible to meet. Today, a small business owner usually can’t visit his neighborhood bank to get a quick approval on a mortgage request. Instead, his best option may well be an alternative financing solution if wants to expand his business or move to a different location.
Online small business lenders
Many lenders today who are interested and even eager to provide money for small business expansion don’t have a brick-and-mortar presence. Instead, they offer their services online. Online loan providers often don’t hold a business to the same criteria a traditional bank does, according to reports from USA Today. The traditional criteria of excellent credit scores, healthy cash flow and sufficient collateral aren’t necessary when a non-traditional lender considers a loan to a small business. However, the small business owner usually pays for the privilege with a higher interest rate.
Short-term loan options
Many alternative financial institutions offer short-term loans to small businesses. Business owners who can guarantee an increase in income as a direct result of an expansion can benefit from these types of loans. The short-term loans are typically for three to six months, giving owners time to realize a return on their investment before they need to pay back the loan.
Multiple loan options
Some business owners who may not be able to qualify for the single larger loan needed to expand might be able to accomplish their objectives through several smaller loans. Multiple small loans allow the owner to pay off earlier loans before applying for more money, making it more likely that a loan will be approved. USA Today reports that this is a particularly good option for a business owner who can expand in stages rather than immediately.
Alternative loan possibilities
Mini bonds are another alternative money source business owners should. These types of loans are often geared toward specific industries or particular community growth programs. The mini bonds are usually offered by banks or the government and carry the added benefit of lower interest rates than other alternative small business mortgages. These types of loans can be difficult to find.
Private lenders are another source of funds a small business owner might want to consider. Private lenders such as APEX Mortgage Corporation focus more on the small business owner’s equity rather than on his credit score or cash flow. With private mortgages, the business owner also sees the advantage of a quick decision and turnover of the needed funds because loan committees and traditional approval processes usually aren’t necessary.
Online lenders like Small Commercial Mortgage Online offer mortgages to small business owners who may not qualify for typical larger mortgages. These types of mortgages usually are for shorter terms than the residential mortgages with which most people are familiar, and usually come with a higher interest rate. However, they are an excellent option for small business owners who need to renovate or relocate quickly.
Loans haven’t completely dried up for the small business owner. However, he just has to search more diligently for it. When he takes the time to do some investigating, he’s likely to find just the loan he needs to expand his business.