Top 4 Alternatives to Traditional Lending

Traditional lending options aren’t always the solution for personal and professional finance obstacles. Oftentimes there’s enough bureaucratic paperwork and extended approval times — a frustrating process for those looking to organize their finances. Looking past the traditional avenues opens up a host of new opportunities. Whether it’s for capital purposes, refinancing, or simply operational, the advantages of alternative lending options are growing at an exponential rate.

We’re breaking down our four alternatives to traditional lending below.

Subprime Borrowing

This term often refers to borrowers with flawed credit or who perhaps had past issues with debts. Their established credit isn’t where it needs to be, which makes subprime borrowing a viable alternative. For some, it refers to low-risk borrowers that may be enticing to lenders who wish to work with them. Lenders will decide on a debt-to-income scale to know what the borrower can afford.

Unlike traditional lenders, there is a shorter list of information that needs to be provided to qualify — your basic banking and employment info should be enough to get the ball rolling.

There is a variety of options available for subprime borrowers — credit cards, auto loans, and student loans are some examples of what’s available. Managing your credit and making those monthly payments will keep subprime borrowing as a viable option.

Payday Loans

Going through the process of borrowing from traditional lenders can often be a long, drawn-out process. The bureaucratic procedures that have been put in place make it difficult for many individuals and businesses to secure the funds they need to manage their temporary cash shortage. With payday loans from a reputable company, this option is meant to put money in your pocket faster, so that you can address any debts or unexpected costs that need to be dealt with.

Finding the appropriate lender for your situation may take time, but they should be able to work through a quick turnaround and require only basic employment and banking details.

Merchant Cash Advantage

For businesses, in particular, a merchant cash advantage is designed to offer an advanced loan against future sales. The business owner would enter into an agreement with the lender, selling them a fixed percentage of future sales plus interest for instant cash flow.

Since this method is connected to the sales of the company, there is a minimal chance of additional collateral. An important piece of information here is to be mindful of the income you’re bringing in against your current budget since you will be paying this loan back through your company’s sales.

Lines of Credit

As one of the most commonly used alternatives, opening a line of credit has been a popular choice for individual and corporate borrowers. One of the obvious benefits is the variety of available credit lines — each with its limit and interest rate. Choosing this option is a way to ensure you have immediate access to the funds you need without the tedious approval process that comes with traditional lending options.

A line of credit allows the borrower to take only what they need, avoiding an unnecessarily large loan with high-interest rates. Flexible repaying options offer borrowers an accessible way to address their current needs and ultimately work towards total financial freedom.

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