If you are trying to grow your business and you need to secure capital, it can be difficult to decide whether to use an alternative money lender or a bank. So, which way is better when it comes to getting what you want? The answer is simple, whichever organisation approves your loan. Many business owners want a bank loan, but alternative money lenders carry several benefits.
Interest Rates
A lot of business owners are under the assumption that banks offer much lower interest rates on loans, but this simply isn’t the case. You’ll find plenty of alternative money lenders in Australia who offer low interest rates on their loans, some match what you’ll find in many of your more conventional banking institutions. An established private money lender has several investors, so they have funds to lend to clients. Banks add a lot of additional charges to their loans – including:
- Service fees
- Reporting Requirements
- Covenants
These additional charges aren’t included in their rates, but they make the overall cost of the transaction a lot higher.
Faster Processing Times
The reason why many people choose to use private money lenders is because they can process your application much faster than traditional banks and credit unions. You don’t have to jump through as many hoops as you would with other money lenders. You can apply for a loan online and have your application processed in a matter of hours, if approved, you’ll have the funds in your account within 48 hours.
This isn’t the case with banks, they take time to process loan applications, leaving you to wait a few weeks to finalise your transaction. If you require money fast, caveat loans are a wise choicefor your business. If an opportunity presents itself and you need fast cash, caveat loans are perfect for you and your company.
Less Stringent Applications
In comparison to a bank, private money lenders are more willing to approve loans. They aren’t as strict, meaning they take a lot of factors into consideration and do their best to help their clients secure funds. When you’ve a poor credit rating or you’ve defaulted on a loan, it is almost impossible to get money from a bank, but a private money lender is more open to discussing your background history and trying to come up with a solution that works for both parties.
Varied Loan Amounts
With traditional banks, you can’t borrow less than a certain amount, so if you need money for a small business venture, you are stuck applying for excess money that you don’t need. A private money lender allows you to borrow as little or as much as you like, so you get exactly what you need.
Although traditional bank loans do have their place, alternative lenders give clients an option when conventional banks don’t offer access to funds. They allow customers to apply for varied amounts, they provide rapid access to funds and there is less paperwork involved. In addition, it is a lot easier to get approved if you’ve bad credit.
