In a perfect world, Tim P. an ambitious 38 year old who is about to expand his microbrewery business by opening up a taproom, will enter his local bank, present the banker some of his great achievements and goals, and walk out with a fat check with a 6% interest rate, all in a matter of days. After all, Tim’s been a good customer for the bank, his sales have consistently gone up, and that’s what banks are for, right?
Wrong! The reality is, however, Tim will barely get time to see an attentive banker after a long wait, and even if he does, Tim will find out his credit isn’t perfect, his cashflow projections are not stellar, or will face an endless list of supporting documentations to provide. Hypothetically speaking, even if Tim was approved for a traditional bank loan, it will most likely be months before seeing a dime loaned out to him from a major bank...assuming Tim has roughly 20%-30% sitting around in cash to inject into the loan facility and he's willing to put up his home as collateral on the loan. Of course, there are those who can benefit from the system, but there’s no doubt that major banks are more interested in doing business with multi-million dollar mid-sized businesses rather than a local brewery, coffee shop, restaurant, or retail store. As Bob Hope said, “A bank is a place that will lend you money if you can prove that you don't need it."
Discouraged by the bank’s less than warm attitude, many small business owners may resort to the ever alluring temptations of credit card offers. Credit cards don’t ask you questions, and it sure is easy to swipe and not think about it, at least, for a while. Unfortunately, the average credit card interest rate is over 15%, and is often dubbed with penalties or credit limits that hinder you from managing your business effectively.
Tim really doesn’t want to forgo the opportunity to expand on his microbrewery and open a tasting bar in a growing district. That corner spot for that price is not going to last long. For many small business owners as Tim, with the talent to capture opportunities but not enough scale or financial trek record in major bank standards (less than one out of five small businesses are approved for loans), alternative financing is what bridges the gap.
Alternative lenders and small business loan resources such as LVRG are in the middle of this spectrum, catering to growing small businesses, with a focus on efficiency and moderate risk taking. After a simple screening of bank & credit card statements, and a one-page application, Tim is ready to put that $100K into good use, expecting a two, three, or five-fold return from his expansion. In other cases that require short-term loans quickly, such as to pay for the cost of goods (have a big deferred payment contract, for instance), small business owners jump through significantly fewer hoops with reliable alternative financing companies.
Simply put, alternative financing small business loan options promote market efficiency by offering capital with relatively ease to shrewd small business owners, allowing them to drive their businesses to the next level. Clearly, each business has different needs, and it is extremely helpful to seek out for various options. Some may be better off with traditional banking, and others, not so much. As for all the Tim’s out there fueling the “real” economy, alternative financing from LVRG is the less hassle, reasonable, and sustainable option that fills the void. We're here to help, call (855) 998-5874 or click below!