The economy has made securing a loan particularly difficult for many businesses. The Small Business Administration reported that small business loans dropped to $613 billion by the end of 2011. That is about 15% lower than the amount of loans issued during the peak of the financial crisis. These businesses are trying to find alternate forms of financing that they can take advantage of. Fortunately, there are several other financing opportunities small businesses can take advantage of.
Small Business Loans You Can Consider
Traditional lenders were primarily concerned with finding borrowers who had a good credit score and collateral for the loan in question. They have tightened their requirements since the recession, which made it increasingly difficult for many small businesses to get the financing they need.
Other financial institutions have decided to challenge the existing system. They are focusing on more subjective data that people can use instead. This data includes banking statements, sales generated over the Internet and even the company’s social media presence.
Tens of thousands of small businesses have benefited from these programs. Some companies have received loans up to $150,000, which is considerably more than most lenders would been willing to give them since the financial crisis ended.
Getting a Loan from a Creative or Alternate Lender
You should position yourself to take advantage of these types of loans if you are a small business. Here are some factors that you may want to consider.
- Understand the screening software
Many of these businesses use software that verifies a company’s potential to increase revenue in the future months. One of the most popular applications companies use to screen people is Kabbage. This software tracks all your financial activity and your social media accounts.
- Maximize your sales
You will need to show that you are able to get a high sales volume to generate the revenue you will need to pay back your loans. You can develop a solid ecommerce presence to prove to your lender that you will be able to generate the revenue needed to repay your loans.
- Generate a solid brand image
All lenders will be more inclined to invest in a company that has taken the time to build a good brand image. However, a solid brand image is going to be much more important when you are working with alternative lenders. Your brand image will be one of the only cards you have to play when you don’t have much collateral. You will want to build a solid social networking presence and generate as much positive feedback as possible. Of course, your brand reputation should always extend beyond the Internet. However, lenders will be able to gauge your brand much more easily when there are positive statements online.
Think Outside the Box in a Bad Economy
The economy has made life very difficult for many entrepreneurs. You will need financing to expand your business. Fortunately, you may be able to take advantage of a number of alternative lending opportunities if a traditional lender doesn’t want to give you a loan.
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