Micro Loans Or Crowdfunding – Two Alternative Finance RoutesMay 30, 2021
There are some valid reasons to apply for alternative financing: Perhaps you were rejected by traditional lenders, investors or bad lines of credit. Maybe you have an imperfect business credit rating. You really need money in a hurry, alternative financing usually takes lesser time for the application and the approval rates aren’t as high. Or perhaps you’re trying to recoup from an emergency and are worried about losing your cash flow. Whatever your reason, alternative financing can be just the thing you need. Here are some tips to help you find the right source for your money.
Be wary of banks and other financial institutions that offer short-term financing. These banks are often more interested in collecting interest payments and keeping their shareholders happy than they are in truly helping you pay off your debts. Lenders like to receive payments from customers who are “indebted” for quite a while – that means that they’ve been late on at least a couple of payments and are in danger of becoming delinquent. So keep your eyes open when applying for alternative funding and don’t sign up with a bank or private lender that will do business with you only after you’ve filed bankruptcy. If you’ve got a good track record of paying your bills on time and with hardly a blemish to your credit, most lenders won’t take too kindly to your situation Alternative funding.
Lenders also like to work with people who have a low to average business credit score because this means that they probably won’t default on their debt obligations any time soon. You may think that having less time on the line to repay your debts means that your interest rate will be higher, but that’s not necessarily the case. Keep in mind that alternative funding lenders typically loan a higher interest rate than traditional bank loans. But since you’re already getting a higher interest rate through your current creditors, you can negotiate a lower balance transfer fee with them and use that extra money to reduce your overall debt balance.
The downsides to working with alternative funding companies is that they usually charge very high fees. Additionally, the terms of these types of loans are not particularly attractive. You’re not going to be able to deduct any sort of interest expense from your taxes. If you want to apply for traditional bank loans, you’ll need to supply a 1099-C form to the lender with your income information. You may also have to meet a minimum credit requirement, which is a waste of time as most small businesses don’t have enough trouble meeting this criterion.
There are more alternative financing options becoming available every day. When traditional banks start to feel threatened by a local community’s economic woes, they quickly begin offering bad credit business loans to help tide over the crisis. However, because they don’t own the infrastructure to facilitate small business loans, it’s often more difficult to get approved and often costs them more to do so. For this reason, more people are turning to alternative funding options, such as working with Micro liens. Unlike traditional bank loans and Small Business Administration loans, these types of loans require no collateral and are immediately available to the borrower.
These types of loans are available in a number of forms. You can get them through a lender that offers Micro liens as a form of short term financing solution, such as from a local bank. In addition, you can find many Micro-lien loans online, as well as at other websites that provide short-term finance solutions.
Another alternative that has become quite popular recently is called Crowdfunding. This financing option involves gathering a group of volunteers to raise funds for a single purpose, which can be anything from renovating a home to starting a new business. The way that Microlending works with this type of funding is that the Micro investor will provide a small equity loan backed by a Micro secured credit note. Because this is a loan backed by the credit that is limited time based, it will be very easy for the Micro investor to repay when the time comes.
There are several advantages to choosing either of these two alternative finance routes. With traditional financial institutions, you have the risk of having your loan rejected due to poor credit histories or even just being passed over entirely. On the other hand, with Micro lending you never have to worry about having your loan rejected due to poor credit history or just having your application declined completely. With either of these types of financing routes you will also be able to find a variety of deals and packages that will appeal to your specific needs. Either of these two investment solutions is great for people with bad credit histories or those with little to no experience building their own business.