Direct Lenders – Are They the Right Choice for Your Small Business?
It’s no secret that after the financial crisis of 2008, banks were more stringent in screening a business loan applicant. Fewer business loans were approved, especially small loans, as they are less profitable. This caused small business owners to turn to direct lenders, also known as alternative financing companies, for the funding they needed.
What are Direct Lenders?
A direct lender can be any financial institution that provides funding to small businesses directly, without the need for a broker or intermediary. However, with fewer small business loans being approved by banks and other traditional financial institutions, the direct lenders that are in demand are those specializing in alternative financing. These types of direct lenders are filling the gap in small business funding created by the downturn in traditional business loan approvals. Obtaining business financing from direct lenders can provide funding options and benefits that traditional financial institutions can’t offer.
Greater Lender Discretion
When you go to your bank for a business loan, your credit score is among the top criteria they consider. They have a set list of criteria that has to be met in order to approve a loan. That list is black and white, there is no gray area. In addition to using some of the same criteria, direct lenders utilize fintech to dig deeper into your business and financial history to determine if providing your business with funding is a wise decision for them.
There is also no third party intermediary they have to answer to whereas with traditional business loans there is. This allows direct lenders to evaluate your creditworthiness without any third party interference.
Even though direct lenders may dig deeper into your financial history, fintech allows them to do it more efficiently and much faster than traditional financial institutions. So what does this mean for you? You can get the funding you need much faster than when applying for a traditional business loan. Getting funding when you need it most can be the difference between edging out your competition or falling behind. The need for fast funding is often accompanied by some type of business emergency. In those cases, direct lenders can make the difference between growing your business or having it fail.
More Funding Options
Direct lenders offer a variety of funding options that go beyond the typical business loan. That variety gives business owners more flexibility in how they use the funding and how they make repayment. Many of the funding options offered by direct lenders such as invoice factoring are simply an advance on money already owed to you. With a merchant cash advance, you receive an advance on future sales. A percentage of those sales once received automatically go toward repayment. Both of these direct lending options also allow you to avoid taking on additional debt. Many direct lenders also offer business cash advances, purchase order funding and equipment financing,
Direct Business Funding with CFG Merchant Solutions
At CFG Merchant Services, we work with you to grow your business fast and offer different financing options to fit your individual needs. Our team brings to the table more than 60 years of institutional investment banking experience in the credit, commercial finance, and capital markets.
We are not bankers or middlemen. We are direct funders that care about your business. We are entrepreneurs ourselves and have experienced first-hand the frustration in acquiring flexible and timely financing. CFGMS uses proprietary analytics and technology, along with good, old fashioned common sense underwriting to provide fast and efficient access to capital. We value relationships as much as the speed and efficiency of technology.
Privately owned and operated specialty finance and alternative funding platform, we focus on providing capital access to small and mid-sized businesses (Merchants) in the U.S. that have historically been underserved by traditional financial institutions and may have experienced challenges obtaining timely financing. Contact us or apply online today!