Such a relationship may be more possible than you think. In tough times conventional sources of lending become scarce for small business owners. So having a “go to” source for immediate capital may seem out of reach for some. The good news is that this essential resource is more attainable than many owners may think.
This role is usually filled by alternative lenders who, if you are working with the right company, will assign a personal contact who’s role it is to:
• Provide responsive support and customer service.
• Pay close attention to your specific challenges and urgencies.
• Offer insightful guidance when you need it — even if it means directing you to another solution or source of capital.
• Present you with acceptable funding terms tailored for you, your business, and your situation.
But not all alternative lenders are alike, especially for businesses that are considered a higher credit risk. It is important to watch out for:
1. Excessive upfront fees.
2. Monthly payments that exceed 12% of your monthly revenue.
3. Repayment terms that are so short, the business isn’t able to reap the benefits of the additional capital.
The key to borrowing in the alternative lending space is establishing a mutually beneficial relationship.
This is true in any industry, and it’s especially the case here.
To make a good candidate for this quick and sometimes vital source of capital, you will want to:
• Establish a sound pay history.
• Keep in touch with your lender.
• Educate them about your business.
These factors will impact funding terms and approvals.
Finally, in addition to a source of capital, a strong relationship with a lender is also a source of peace of mind. Knowing you can act fast when opportunities arise, get through seasonal dips in revenue, and handle any unexpected expenses – are all outcomes that can reduce the stress that all of us entrepreneurs experience.
Marissa Ignatowich is founder and president of Med Direct Capital, a direct lender of capital to small businesses. As an entrepreneur herself, Marissa is especially in tune to the challenges of small business owners. She has been providing capital and insights to small businesses across the U.S. for more than a decade. You can reach her at marissa@meddirectcap.com. Also, learn more at https://meddirectcap.com.