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Alternative lending is a financing different from bank and other union lending. Other loans allow small businesses to get more financing or avoid some fees associated with traditional banks. Alternative lending, sometimes called online or fintech loans, refers to loans offered by non-bank lenders. These lenders do not accept deposits and typically operate online, using technology-first applications to expedite and expand access to credit. Let’s explore this in detail.
What is alternative lending?
Alternative lending refers to all types of financing other than traditional banks and mortgage loans. This may include microloans, crowdfunding or direct lending. Other loans may allow small businesses to get more business financing or avoid some of the fees associated with traditional banks.
Some loan companies offer traditional loans, while others provide small businesses with capital for equity or provide a fundraising platform. And they often do this without the strict restrictions of banks.
Alternative Business Lenders in India
Kissht
Kissht was founded in 2015. The app-based business offers multiple lines of credit to consumers and small businesses. It offers customers online loans or buy now, payday loans, personal loans, mortgage loans, mortgage loans and more. Users can submit their Aadhar card and register through the KYC process. It also offers an online process from hiring to lending. Its application is available for Android devices.
Alternative loans, also known as marketplace lending, peer-to-peer lending and P2P lending, emerge from online platforms that use technology to consolidate low-interest loans from lenders, with loan investors always looking for good returns.
ZestMoney
Online platform for money at point of sale. Here, customers purchase products from a network of partners and pay them in regular transactions. It helps in paying bills in advance. Provides financing based on bank information. Users can access financing options by filling out KYC on the portal. The application is available on the Android platform.
Navi
Founded in 2018, Navi is one of the application-based financial product platform providers. Get instant loans, personal loans, home loans and health insurance through the Navi app. The application is available on the Android platform.
Simpl
Simple founded in 2015 .Online business of financial purchases. Users shop online and pay with a seamless process. The company offers users a line of credit based on history with the merchant, expenses, and timely repayment. It also has an app-based platform that helps track purchases, future payments, and account activity. Their apps are available on iOS and Android platforms.
Top Alternative business lenders group
Small business owners want interest rates from other lenders that are about the same as big banks and more than small banks, according to a 2022 survey report from the Federal Reserve. If you are considering a business loan, you can get it from the following companies:
Funding Circle
Funding Circle offers commercial loans with competitive interest rates and repayment terms. Obtaining loans of up to $500,000 with maturities of up to seven years is possible. However, this is a good option for small businesses, unlike some lenders that must meet strict requirements to qualify. The credit score must be at least 660, and you have been in commercial activity for at least 24 months.
Blueline
Apply for a business loan with Bluevine and get approved in minutes. Once consented, it can withdraw your money in as little as 24 hours.
Bluevine offers credit lines up to $250,000 with up to 12 months repayment terms. This line of credit is also a good choice for new ventures or businesses with bad credit because they can qualify with a minimum score of 625 and at least six months of business.
OnDeck
With OnDeck, apply for a short-term loan or line of credit depending on the type of financing you need.
OnDeck loans are available in amounts Up to $250,000 with maturity options of up to 24 months. On the other hand, lenders offer credit limits of up to $100,000 with repayment terms of 12, 18 or 24 months.
Whatever you choose, OnDeck can help you get a fast loan 24 hours a day.
Fundbox
To qualify for a business loan from Fundbox, you only need to be in business for six months. Credit limits are up to $150,000, and repayment terms are 12 or 24 weeks.
Fundbox is also a good option for businesses with bad credit because their minimum score can reach 600.
Alternative business funding
Understanding other types of financing is important for the financial planning of any business, and it is good to understand which type of financing is best for the business before making a decision. A few important aspects of credit and financial solutions and the benefits they can bring to the business are:
Invoice Factoring
Invoice factoring is another financing method where a company sells its invoices to a factoring company at a discount. The business gets priority on these invoices and the financial institution takes over the collection process.
Crowdfunding
This is a type of financing provided by many people who want to build a successful business. Crowdfunding, mostly done through online platforms, is attractive to companies that have customers interested in their products or services.
When the masses have no jurisdiction over the law, business can still follow its supporters; This is a group of people who can easily fight against business if they don’t comply.
Grants
Grants are funds provided from a business entity (public agency, charity, grant agency, etc.) to provide cash quickly to a small business. This generally applies to businesses where these organisations can be legally financed and have a specific purpose.
An advantage of the grant is that it comes with no strings attached, if the company still wants to achieve the same goal as the service provider.
Peer-to-peer lending
Peer-to-peer lending is the process of sending money from one person to another without the involvement of a financial institution in providing the loan.
Interbank financing provides borrowers with a higher return on investment than other types of financing and is also easy to obtain because there are no regulations from financing companies.
Merchant cash advance
Like cash-based cash advances, merchant cash advances provide businesses with a one-time payment as a percentage of future sales in exchange for cash-based payments.
The difference between the two is that during a period when sales are busy, the proceeds can be repaid faster, while during a period when sales are slow, the repayment period may be longer. However, the money earned by the trader must be repaid within three to eighteen months from the date of receipt of the loan.
Business credit line
A business line of credit based on a predetermined credit limit that a business can access or withdraw at any time. The company can continue to borrow up to its limit. Once these loans are repaid, the business can open another line of credit.
Charul is a content marketing professional and seasoned content writer who loves writing on various topics with 3 years of experience. At Tata nexarc, it has been 2 years since she is helping business to understand jargon better and deeper to make strategical decisions. While not writing, she loves listing pop music.
