What is Alternative Financing?
Alternative financing is any type of lending that does not come from a traditional institution, such as a bank. These types of loans are typically more flexible, have a simpler application process, and have a faster turnaround time. A project can be funded in as little as a few days from the application.
They are a great option to fund your business venture when traditional funding cannot meet your lending needs, or you don’t qualify for the loan.
The benefits of alternative financing are:
- Simple application process.
- Quick approval turnaround in as little as a few days
- Flexible loans because we work with private lenders.
Here at Innovative Capital Corporation, we specialize in alternative financing opportunities for you and your business. Our team of loan experts understand the different loan options available, and work with our vast resources to find you the right lending partnership.
Unlike traditional bank loans that can take months to receive approval, our process can take as little as seven days to fund your project. What we do differently is we take your loan application to multiple lenders and leverage their bids against each other so that we can negotiate the best rate and term for you. We save you the time it takes to apply separately for each loan, and money by ensuring we find you the best rate and term out there.
We are not bound by the rules and regulations of commercial bankers who must follow the criteria laid out by the institution. Instead, we have the flexibility to work with them and other lenders when we see an opportunity that fits their criteria. Curious about using alternative financing to fund your next project? Reach out to our team today to schedule a meeting.
What Types of Alternative Financing are There?
Hard Money Loans
These loans are typically funded by private investors. Usually, they are associated with real estate funding because they allow for quick closing, as little as seven days, and provide the cash payment incentive. While they have shorter terms, their interest rates tend to be higher.
Lines of Credit
This lending method acts like a credit card, but is used for the intended purpose of one specific project approved by the lender. You can borrow a certain amount with interest. When that amount is paid back, the limit returns to its original value.
Crowdfunding
Also known as peer to peer lending, crowdfunding comes from multiple sources. It does not rely on just one private investor or one lending organization. You can raise the capital you need to fund your project through networking with multiple investors.
Bridge Loan
A bridge loan is a short term loan that allows the borrower to fund a project through personal collateral. That collateral could range from a home to other assets. While they do have higher interest rates associated with them, they do have a faster application and underwriting process.
Asset Based Loan
The borrower can use an asset, such as a home, inventory, or other property, to secure a loan instead of relying on credit scores. The assets themselves are the collateral for lenders.
What is a Traditional Loan
A traditional loan is any loan taken from a traditional banking institution. These loans can come from your local bank or a national bank like Bank of America. Traditional loans are most commonly what comes to mind when people considering taking out a loan. However, each bank requires slightly different criteria for a loan approval.
Banks often have clear predetermined standards for their lending capabilities. They must live within the set parameters of minimum credit scores, maximum loan amounts, or sufficient credit history. Each of these requirements typically varies from bank to bank.
Due to their specific requirements and guidelines, securing a traditional bank loan can be challenging. According to Forbes, commercial banks approved only 27.3% of submitted loan applications in 2019.
Commercial banks have specific guidelines and requirements by which they can and cannot lend. If your needs meet these requirements, you’re in luck! However, if you do not meet their requirements, you may have taken the risk of investing weeks of review only to end up back at square one if you’re turned down. While traditional bank loans are often associated with lower interest rates, they often do, however take a bit more time to close than an alternative lending solution.