Over the last years it has become really noticeable that the arena of SME Lending has grown like never before. As of right now, your business has access to many lending products and more lenders on a national and international basis than ever before. This new evolution of Small Business Loans will allow your business to have access to funding from all over the globe.
Traditional SME Lending
If you prefer to deal locally, you can visit your nearby bank and apply for a bank loan there. When you do, be sure to should bring your identification, company organization and registration docu
ments, two years of audited financial statements and tax returns which includes a confirmation letter of your tax department confirming your taxes are current. Also, a Business Plan might be required along with filling out the application with bank agent.
Once the required documentation has been received by the bank, they will request a formal credit report in the respective credit reporting agency of your county. Assuming that the report is favorable with respect to credit score, outstanding judgments/collections/liens, your ratio of debt servicing to revenues falls within the permitted limits and you should be given an offer to finance by the bank. In the case where you do proceed with the loan, they will deposit the funds into your account once you have signed all necessary documents and the bank has placed a lien on all assets of your business in addition to your personal assets (as they will likely also be pledged as security for the loan). To maintain the proper expectations, it is important to acknowledge that the processing time for you to get the funds deposited into your bank account, from the time that the complete application has been submitted, can typically span 10 to 12 weeks. No urgent situations should be considered when considering this type of financing.
Alternative SME Lending
Should you be interested in working with Alternative SME Funders (not banks), it should be noticed that the approach and security required in not as restrictive. Typically speaking you are going to find that the Alternative Commercial Lenders in the market place will require bank statements for the recent 12 of months, ID along with a letter of explanation of what the funds will be used for, in addition to the formal application with the lender. The processing of your application will then take place which ordinarily is carried out in a matter of a couple of days. When all has been accepted, approval and documents will likely be issued within hours in most of situations, not weeks. Upon receipt in the endorsed agreement by the Alternative Commercial Lender, the actual funding will probably be scheduled for the following day. Some funders require a wet signature (handwritten) and others will accept a digital signature/scanned copy. Most funding contracts will stipulate required items that have to be completed before transmission of funds. The time period from application until funding is usually under a week. My individual record is three days!
Bank loans can be a pretty cumbersome and painful, taking weeks or months to wade through application forms and hurdle after hurdle to jump over to get the loan you need to take your company to the next level.
Traditional and Alternative SME Lending Compared
Aside from the simplicity and efficiency of alternative SML Lending, there is yet another distinction. This really is the expense. It does have a higher cost to utilize non-traditional Small to Medium Business Lenders and it is up to the business owner to ascertain if the additional expense outweighs the benefits of having the ability to fund quickly and skip over all the red tape of the traditional bank. Every single company is unique and therefore has distinctive requirements. Only you can decide what’s the very best for your enterprise. The reason all the different varieties of funders exist is because of the distinctive varieties of borrowers of the market. The decision of what to do is yours.