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5 Up to the Minute Alternative Small Business Loans

Published By Faith Stewart at November 5th, 2019

5 Up to the Minute Alternative Small Business Loans

Alternative small business loans can be a great business funding option.  We’ve put together a list of some of our favorites, but remember that details can change without warning.  We update regularly.  However, you should check with the lender itself to be sure you have the most current information.

And Why You Still Need Business Credit Even if You Already Qualify for Them

When a business owner is looking for funding, it can be a bit confusing.  There are way more options that most realize before the fact.  Many head straight to the bank and apply for a loan.  When they are denied, they are left with confusion and despair.  First, they do not know why they were denied, and next, they don’t know what to do if they can’t get a loan.  There are a few different options, but the next best thing for most business owners would be alternative small business loans.

What Are Alternative Small Business Loans?

These are loans that come through private lenders rather than banks.  The vast majority of these lenders operate online.  For the most part, the process is fast and simple. Borrowers fill out an application online, and generally receive approval in as little as a few hours.  Once approved, funds are often in the borrower’s account in as little as a day or two.alternative small business loans Credit Suite2 - 5 Up to the Minute Alternative Small Business Loans

The fast, easy process makes these alternative small business loans an attractive option for business funding.  This is especially true for those who find they do not qualify for loans from traditional lenders.

Is There a Catch to Alternative Small Business Loans?

I know what you’re thinking.  If these alternative loans are so fast and easy, why even bother with traditional loans.  Do people just not know about them? There has to be some catch.  Well yeah, there kind of is.  The catch is, interest rates and terms are considerably less favorable than those you may get with a traditional lender.

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That’s because, in an effort to extend credit to those that do not qualify with a bank, alternative lenders have to be a little more relaxed with their eligibility requirements. As a result, they are taking on significantly more risk with their loans.  To make up for this, they increase interest rates and loan terms to balance things out.

How do I choose the Right Alternative Loan for Me?

Once you know you are in a position to need alternative small business loans, you can start looking for the right one for your situation. How do you do this?  The key is to research, research, research.  Extensive research is absolutely necessary to ensure you find the best fit for your business.

While many of them function the same with similar requirements, there are some vastly different and innovative platforms for these types of loans as well.  Read all the reviews, but don’t forget to look at the actual lender websites too.  Only you know what your specific situation is.  Only you know your credit score, how long you have been in business, and how much debt you can handle.

How to Start Finding the Right Alternative Small Business Loans

Start by determining your eligibility factors.  You may not be able to anticipate what every single lender will require.  However, there are a few things that most lenders will want to know before approving a loan.  Things such as credit score, annual revenue, and length of time in business are pretty common.

If you know your score and what your annual revenue is before you begin looking for alternative small business loans, you will be able to weed out the ones you do not qualify for from the beginning. There are so many that you will definitely see the need to do this.  Just to show you a sampling of what’s available, we have chosen a few different ones to get you started.

5 Alternative Small Business Loans to Kickstart Your Research

Start here, but definitely do not stop with this list.  There are far too many options available, and new ones pop up regularly.

 

Fundbox

If you start with a search for alternative small business loans, Fundbox is going to be one of the first to pop up.  It is a line of credit rather than a loan, but it is a great funding option because there is no minimum credit score requirement.

They offer an automated process that is super-fast. Repayments for Fundbox loans are automatic, meaning they draft them electronically, and they occur on a weekly basis.  One thing to remember is that you could have a repayment as high as 5 to 7% of the amount you have drawn currently, as the repayment period is comparatively short.  This means you need to be sure you have enough funds in whatever account you connect them to so that it can cover your payment each week.

Loan amounts come as low as $100 and as high as up to $100,000, but the max initial draw is $50,000. Though there is no minimum credit score requirement, they do require at least 3 months in business, $50,000 or more in annual revenue, and a business checking account with a minimum balance of $500.

BlueVine

As you find with many alternative business loans, lenders often offer options more similar to invoice factoring and lines of credit, as these present less risk than straight term loans.  This is true of Fundbox as well as BlueVine.

The minimum amount available for BlueVine loans is $5,000 and the maximum is $100,000. Annual revenue must be $120,000 or more and the borrower must be in business for at least 6 months. Personal credit score has to be 600 or above. It is important to note also, that BlueVine does not offer a line of credit in all states.  You can find out more in our review here.

Upstart

Upstart is one of those that uses a completely innovative platform for alternative loans.  The company itself questions the ability of financial information and FICO on their own to truly determine the risk of lending to a specific borrower.  To qualify borrowers for Upstart loans, the company uses a combination of artificial intelligence and machine learning to gather alternative data instead.  They then use this data to help them make credit decisions.

This alternative data can include such things as mobile phone bills, rent, deposits, withdrawals, and even other information less directly tied to finances.  The software they use learns and improves on its own. You can use their online quote tool to play with different amounts and terms to see the various interest rate possibilities.  Typically, business loans are available ranging from $1,000 to $50,000.  Interest rates vary greatly, ranging from 7.5% to 35.99%.  Repayment terms can be either 3 -year or 5-year.

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To be eligible for a loan with Upstart, you must meet the following qualifications:

  • Credit score of 620+
  • No bankruptcies or negative public records
  • No delinquent accounts
  • Meet debt to income standards (they only note they will check this ratio, not what their standards are.)
  • Have fewer than 6 inquiries in the past 6 months on your credit report, not including those related to student loans, vehicle loans, or mortgages

These are the requirements they list on their website.  One independent review said that the requirement for the debt to income ratio is a maximum of 45%. It also says that the minimum annual income has to be at least $12,000.  For more information on Upstart, see our in-depth review here.

Fora Financial

Founded in 2008 by college roommates, Fora Financial now funds more than $1.3 million in working capital around the United States. There is no minimum credit score, and there is an early repayment discount if you qualify.

The minimum loan amount is $5,000 and the maximum is $500,000. The business must be at least 6 months in operation and the monthly revenue has to be $12,000 or more. There can be no open bankruptcies.

OnDeck

Obtaining financing from OnDeck is quick and easy. First, you apply online and receive your decision once application processing is complete. If you receive approval, your loan funds will go directly to your bank account. The minimum loan amount is $5,000 and the maximum is $500,000.

OnDeck loans do require a personal credit score of 600 or more, and you must be in business for at 3 years. Annual revenue must be at or exceed $100,000. In addition, there can be no bankruptcy on file in the past 2 years and no unresolved liens or judgements.

Of course, these are just a few options available.  There are tons out there, and many lenders offer multiple types of alternative small business loans.  From term loans and lines of credit to invoice factoring, there are funding options for everyone.

You Still Need Business Credit

Though these lenders generally offer personal credit minimums for requirement standards, some will take business credit into account if you have it.  In addition, you can always get business credit cards with business credit.  The question is, do you have business credit?  If not, how do you get it?

Building business credit is a process that takes time, but it isn’t hard.  You just have to set up your business to appear fundable, and then work to get accounts reporting to your business credit report rather than your personal credit report.  That means applying for credit using your business information rather than your personal information.

Alternative Small Business and Business Credit go Hand in Hand

If you need funding for your business and do not qualify for loans from a traditional lender, then alternative business loans could be for you.  Their requirements are less stringent than those of traditional lenders, so even if your personal credit score is not great, you could still get one.  However, regardless of whether you have good personal credit, you need to be building business credit.

This will not only extend the benefits already mentioned, but it can also help protect your personal finances.  Despite the fact that your personal credit can at times have a bearing on your business credit, the opposite is typically not true.  So, if there is an issue that affects your business credit, your personal credit should stay intact.

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