Following the GFC, banks became very cautious with how they lend their money. They didn’t lend to certain borrowers particularly those with bad credit or small businesses – in the fear that they would not be able to get their credit back. As a result, many businesses fell into bankruptcy because they had no one to turn to for financing.
If you’re looking to start a business, it can be even more challenging to secure financing from a bank. To get your business operational you may need some sort of finance. This is because you cannot start a company without the necessary capital to sustain it. When banks close the door your business dreams, just remember that it is not over yet. Aussies have one more form of financing that they can use – and that’s alternative lending. Slightly different from the traditional bank, alternative lenders have become quite an attractive choice for those that are in need of a loan.
What Is an Alternative Loan?
Alternative loans are the kind of businesses that aren’t provided by traditional lenders – for example, banks or credit unions. Examples of these kinds of loans are private loans, bad credit loans, wholesale funds, peer-to-peer loans, start-up loans, and so on.
Each of these loans has its own terms and conditions – which is why you must research accordingly. Depending on the lender, you might be asked for a higher interest rate, or given a smaller loan amount. But depending on your preferences, you will choose the one that is most suitable for you. Overall, alternative loans offer a second chance at finance.
Why choose an Alternative Lender?
There are various reasons why you might want to go for an alternative lender.
The Application Process Is Quick and Easy
Every alternative lender will have a straightforward loan application process. Technically speaking, all you have to do is provide some basic contact (or business) information, along with some financial data. A lender will need to quickly assess your financial situation to see whether they have the right loan product available.
Depending on the lender, you can expect to have your application completed in as little as 15 minutes, provided you are working with a tech-savvy lender. If you are borrowing online, it is even more convenient, as you will not have to get out of the comfort of your home in order to make the application.
Funds can be released quickly
It takes a few minutes to a few hours for your application to be approved – all depending on the time at which you make your request. The quicker that you work with the lenders, the faster you can get your funds. At the Australian Lending Centre, we offer an easy way to upload your documents. It takes a matter of minutes and can be done from your mobile. From the moment your application is approved (assuming it is), it can take as little as 24 hours for the money to appear in your account (depending on the lender)
Some lenders do so in 48 hours, but this is still the better alternative to traditional banks, for which you will likely have to wait entire weeks. This way, it will be much easier for you to start off with your projects right away.
You May Borrow with Bad Credit
If you have no credit or bad credit, there is a high chance that banks will not lend you money. They will see you as a red flag – and they will believe that you will not be able to make your payments on time. Unless your credit is above a certain number, there is a high chance that your request for a loan will be denied.
However, alternative lenders such as Bad Credit Loans generally have far fewer requirements. Whilst they still asses your finances, they will still lend to bad credit borrowers. Therefore, if you had trouble making timely payments before or had no luck with traditional lenders, then there is a high chance that you might be luckier with an alternative lender.
You May Use the Funds However You Want
Certain lenders expect that you use the funds that they give you in a particular way. For instance, if you are the owner of a construction company and opt for taking out a business loan, then you need to specify what you plan on doing with that money. As an example, you have to specify in the application that you need the loan to buy a bulldozer – and the lender will know that your profits will start growing with that purchase.
However, with alternative lenders, this will pose no problem. For all they care, you may use that money to buy a bulldozer, pay old Jim’s paycheck, or purchase a new fancy pen for the office. Obviously, you will use that money wisely – but what matters here is that the lender won’t set conditions on how to use that money.
Should I use an alternative lender?
Alternative lenders represent a very convenient solution when you are running low on money, but the banks won’t give you a loan. Alternative lenders offer people who have been refused in the past with a second chance at finance. All that you have to do now is find the right lender that will provide low-enough interest rates.