Business loan applications for smaller businesses are currently at an all-time high. However, that doesn’t mean that those applications are being approved. Recent data suggests that more conventional banks are turning down small businesses more than they have in the past. A recent poll shows that traditional banks approved only about 15% of business loan applications for small businesses. In contrast, alternative and online lenders are going the extra mile to try and help smaller companies during this challenging economic time.
According to the Federal Reserve, small business owners are now experiencing financial difficulties more than in the recent past. This can be attributed to inflation, labor shortages, supply chain issues, and just the impact of the past two years’ events. Those companies who did apply for small business loans essentially did so to stay afloat versus trying to expand their business, launch a new product, or purchase new equipment.
With inflation at the highest it’s been in 40 years. Small business owners aren’t sure what to do or where to turn. This is why so many are looking to alternative lenders for business funding. More and more small businesses are considering less conventional ways to get money for their organizations during this challenging financial time.
Working with Alternative Lenders: What You Need to Know
It seems a no-brainer that alternative and online lenders will be easier to work with, get you the money quicker, and make the process a lot less tedious. So how exactly do you approach applying for small business loans through alternative lenders?
- Research lenders. All lenders are different. And while they may require some of the same things, many will take different approaches to small business lending. Here’s where you want to do some research. Understand the various options out there. And find the best loan program for your small business.
- Compare loan rates and terms. Depending on the lender, the loan product, and your business profile, you will likely be paying different rates for different loan products. Understanding the loan terms and handling where interest rates stand is essential as you prepare to apply for a small business loan.
- Have a plan for your loan proceeds. Indeed, using the money to get through a slower sales period is acceptable. But it’s far better if you have a plan for how exactly you want to allocate the money you earn. This enables you to maximize every dollar.
Applications for Small Business Loans
The loan application process is not as daunting as many think. Again, if you opt to go with an alternative lender such as First Union Lending, the process is relatively easy. You fill out an online business loan application, and a representative will generally get in touch to walk you through the rest of the process. The key here is to be prepared and organized. You want to have all relevant documentation ready to go to keep things moving along. Some of the items and information you wish to have on hand are:
- Tax returns, both business and personal
- Financial statements to include cash flow statements, balance sheets, and profit and loss statements
- Any leases the business has
- Relevant equipment information for equipment financing
- The articles of incorporation if applicable
- All business licenses and permits
- A business plan (if you have one) is particularly important if there are other aspects of your loan application that may be weak.
Also, before applying for a small business loan, you want to check your credit report. See where your debts and liabilities stand. Look for any errors and clear those up immediately. Start paying down some of the higher interest rate debts. The better prepared you are, the better your chances of being approved by an alternative lender.
First Union Lending Helps Small Businesses
Our goal is to enable our clients to thrive and grow. We understand that right now, things can be challenging. And so, we want to make it easy on you. Every loan that we process is custom-tailored for the client. This means there is no one size fits all approach with us. We offer short-term loans, merchant cash advances, and SBA loans, among other financing types. We walk you through this process every single step of the way. Call today, and let’s get started together.