Small Business Loan

Written by Josh Dodes
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Time was, the only fundamental difference between small business loans and big business loans was scale. While minor details may have differed, small business loans looked like nothing so much as miniaturized versions of their larger counterparts. Unfortunately, the problem with loans that simply involved smaller amounts of capital, smaller monthly payments, and smaller collateral requirements was that they did next to nothing from a structural standpoint to take into account the unique needs and limitations of smaller businesses.

Fortunately, in the last few years, a select group of innovative alternative lenders have emerged to address this significant shortcoming. Recognizing that small business loans ought not to be simply miniaturizations of large business loans any more than small businesses are simply miniaturizations of big businesses, these progressive firms have dedicated themselves to establishing an entirely new lending model. The results of this dedication, as thousands of small businesses have already learned first-hand, are nothing short of extraordinary.

A New Kind of Small Business Loan

In an exceptionally competitive economic environment, small businesses have until recently been forced to make an impossible choice. Operating with tight budgets and little financial leeway, business owners in need of operating capital have had to decide whether the short-term assistance of a traditional loan was worth the burden of steep monthly payments. Given that the one certainty of small businesses is the uncertainty caused by unexpected expenses, sudden downturns in income, and time-sensitive expansion opportunities, such a decision could easily represent the adoption of short-term security in exchange for potential long-term catastrophe.

Small business owners have long sought a better way, and alternative lenders have finally introduced a new kind of loan to meet that challenge. Recognizing that smaller businesses are far less equipped than their larger competitors to make high monthly loan payments through financial thick and thin, these lenders have tied repayment not to a set monthly figure, but to a set percentage of future income. By purchasing a fixed dollar amount of your sales in advance, these lenders dramatically reduce your risk of default, as they are only repaid when and to the extent that you make money.

Less Stringent Qualifying Criteria

Such a system--in many respects, more a partnership than a traditional loan--does not simply make it easier to repay borrowed capital. It also makes it far easier for smaller, less traditional businesses to qualify for such loans in the first place. That's because, by using proprietary transaction processing technology to automatically take a set percentage of your credit card sales, alternative lenders are able to attain the security they need to eliminate outright traditional lenders' stringent collateral requirements.

That means that you no longer must own the building in which you operate, and that you no longer must put what limited assets you have on the line. If you have been in business for a year and can show a modest monthly minimum in credit card sales, the premier small business financing providers can help you, typically in a matter of days. It is in this dramatic and favorable restructuring of qualification criteria that the top small business loan providers most clearly evidence what they refer to as a focus on "screening you in" where traditional lenders will often screen you out.

The Future of Small Business Financing

Of course, not all alternative small business loans are alike. The key to finding the best of these small business loans, however, could not be any more straightforward: insist on successful experience and a steadfast devotion to personalized customer service. The finest small business loan providers offer both qualities in spades, having helped thousands of businesses to borrow hundreds of millions of dollars.

Small business owners face enough challenges on a daily basis without also attempting to meet the exceedingly difficult requirements presented by loans designed for bigger businesses. Now that alternative loans tailor-made for small business owners are so close at hand, there is no reason to settle for less. After all, you are far more than a scaled-down version of your bigger competitors.

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