Terms: 5 Months
Bakery Expansion Funding for Inventory & Staff

CMS Funding Working Capital loans

Terms: 5 Months
Bakery Expansion Funding for Inventory & Staff

Since “The Great Recession” started eight years ago, traditional bank lending for small businesses has become a thing of the past. Banks have changed their lending practices and the type of loans they offer. This new type of bank lending does not usually fit the needs of your typical entrepreneur. The change has left the “Main Street USA” small business owner looking for alternative ways to obtain the capital they need in order to be able to continue to grow and expand their businesses.  Small businesses have made up approximately 70% of new job growth since the recession began so getting access to financing is essential thus; a new industry call non-bank lending was born. Non-bank lending has helped keep small business afloat during this transition. This new financing outlet has been growing substantially to fill the gap. To date, there are hundreds of non-bank lenders in the industry all offering similar funding options. So how does a small business borrower choose? It can be overwhelming to find the right company to work with.

Here are some tips on what to look for when shopping for funding:

Have they asked for an application fee, deposit or anything up-front in general?

If they have, THIS IS A BIG RED FLAG.  Non-bank lending companies can prequalify any customer in a simple 10 minute conversation.  If the lender knows the customer is a possible candidate for a cash advance, they will ask the borrower to fill out the application. They usually know if they are approved within 24 hours. Upon approval they will then send out loan documents without requiring anything up-front!  Once the customer signs all of the funding documents, they will receive a wire into their bank account with the approved funds, usually within 24 to 48 hours.  At no time do you need to send anyone money to apply for or acquire funding.

Is the company listed with the Better Business Bureau? 

If so, what is their rating? Most non-bank loans are transacted electronically, so lenders should have a website and also should be rated with the BBB. The Better Business Bureau is experienced at monitoring disputes a customer may have had and assures that the Lender is diligent in resolving any problems that may have occurred.  If the lender doesn’t provide an adequate explanation regarding the customer complaint, the BBB may lower their rating.

Beware Uncontracted Promises…

Many lenders include promises that are a condition of taking your first loan, such as “take this $10,000 loan now and you’ll be eligible for more in a month.” While these promises are commonplace in the private lending industry, be sure to have them included in writing in the contract. The firm you choose to work with will have no obligations to fulfill any promises that aren’t in writing, so it pays to be diligent about having these and any other promises included.

Non-Bank Lending is here to stay and will remain a great way for businesses to access capital when they need it the most. It has been especially helpful for those businesses that now have credit problems post-recession. Banks no longer find it profitable to issue loans under $500,000, and this will continue to drive the growth of the non-bank lending industry as a whole.

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