There are a growing debate and an unresolved one at that Alternative Lending Solutions are so much better than the traditional financial institutions. Figures are indicative that banks have increasingly become so expensive that it has become increasingly difficult to secure financial assistance. However, both offer advantages and setbacks. And you as the borrower will likely have to settle for what will fit your needs. Adam Jiwan, a Co-managing founder of Ridge Road Partners, advocates alternative lending institutions. Alternative lending covers pretty much everything and all the clientele that a bank may offer their services to and this kind of even outs the playing field for both.
For banks, allowing small business loans and small loans to students and people are a huge risk. Gone are the days where if you need a small capital, you go to your friendly neighborhood banker. There is nothing “friendly” at all with the exorbitant rates and the difficulty one needs to go through just to be able to acquire a small loan. Today is all about commercialization and not personalization. Banks do not want small because it is risky for them.
For alternative lenders, the rates are actually higher because they get the money they lend from their capital. They capitalized on the traditional bank’s strict guidelines for borrowers and made their process easier. The clientele can actually be processed online and it is fast. Now the term alternative lending is a byword among small businesses. Some years ago those would not have been the case. The figures show that it is easier to get approved with alternative lending, on average banks acceptance rate is at 13-20 percent, vs alternative lending at 64 Percent. It is not even close. The benefits do not stop there, an alternative lending institution is more flexible in terms of the amounts they can afford to let people borrow anywhere from 5000 to 250000 can be had with alternative lending. Banks will actually not even look at those trying to borrow below 250,000.
Ease of Access
Fully taking advantage of technology, alternative lending companies actually can process applications online in as fast as 30 minutes. And this can be done by just using your phone or a mobile personal computer. Comparing that to probably 3 days to a week spent going to and from the bank, it is no wonder traditional brick and mortar banks are at a disadvantage. The flipside is that alternative lenders are kind of forced to charge higher rates because they face higher risks than banks. By accepting less than satisfactory credit scores, this is understandable.