Getting New Business Loans from Nonbank Lenders

New business loans can be obtained from nonbank or private lenders. These lenders come in many forms and the best examples are credit unions, factors, credit card companies, and private finance groups. Nonbank lenders, also referred to as alternative lenders, are increasingly becoming popular among entrepreneurs, particularly owners of startup businesses.

Therefore, if you really need the additional funds to propel your business, you can always look for nonbank lenders. Here are the reasons why they can be more advantageous compared to other types of lenders.

Wide Variety of Loan Packages


Alternative lenders offer all types of new business loans that will fit your requirements. Many of them even target specific industries to lend money to. So, if there is a nonbank lender that specifically caters to your industry, you can be sure that they know how your business operates. Nonbank lenders can provide loans from a few thousands to millions of dollars. Their loan packages also have different payment terms. So, you can really fit the loans you get from alternative lenders to your specific requirements and ability to pay.

Zero or Minimal Down Payments


Banks and other large financial institutions typically require borrowers to provide a considerable down payment. As for nonbank lenders, they focus more on how cash moves in and out of your organization, and then they base their down payment requirements on their evaluation of your cash flow. As a result, if you have an efficient cash flow in your business, you are less likely to be asked for down payment on your loan.  

Longer Payment Terms

Typical banks and financial groups have very short payment terms. Usually they require borrowers to pay the loan in 5 to 15 years. Well, that is not the case with nonbank lenders. It is not uncommon for alternative loan providers to give their borrowers payment terms that can go anywhere from 20 to 25 years. A longer payment period results to lower monthly payments. Therefore, a businessman like you does not have to worry much about where to get money to pay the loan.

Fast Approval for New Business Loans

Most nonbank lenders process loan applications faster than bigger banks and financial companies. Some alternative lenders, particularly the ones targeting your industry, do not ask for too much documentation. This can significantly cut the processing time. Moreover, many nonbank lenders maintain good standing with larger lending units like the Small Business Administration. So, if you apply for an SBA loan via alternative lenders, your application will be processed and approved faster than if you applied on your own.

Truly, nonbank lenders provide financing opportunities to countless businesses in the country. You can always include them in your list of sources for loans to boost your business.