MSMEs Continue to Thrive in the Alternative Lending Sector

Time and again, the alternative lending industry has proved to be resilient and robust. Economists are clear about the positive impact of alternative financial services on the health of medium and small enterprises, even when traditional banks seemed to have restricted themselves. This robustness has made alternative lending one of the top favorites among entrepreneurs and small business owners. But why and how? Let's delve.

Higher Approval Rates

Crain's Cleveland's report, back in 2013, created huge waves by highlighting the declining trend of traditional bank lending for small businesses, among other financing options. The trend has continued since then, and the primary reason cited is the higher approval rates.

When you are a businessman, running a medium or small business, grabbing the right opportunity at the right time matters more than anything. There is no luxury of trial and error, or let's wait it out. A business owner, when faced with the right opportunity for expansion, would need financing promptly.

The long, arduous approval process of traditional banks proves to be the most significant deterrent in these cases. The speed and the ease, with which alternative lenders like Cresthill Capital and Mantis Funding operate, prove to be more beneficial for expansion growth-seeking startups.

A Holistic View Of A Credit Seeker's Worthiness

Alternative lending models no longer rely just on credit scores to access the creditworthiness of the lender. In fact, companies like Crest Hill Capital and Mantis are preferred by businesses due to the varied sized cash reserves they offer independent of credit scores.

Alternative lending sources use other methods, including digital data, to assess risks of lending to a particular borrower. These non-traditional data sources provide a better and holistic view of borrower's financial performance. Income tax returns, sales, revenue, outstanding invoices, utility payments, and cash flow statements give a better view of the business than just one credit score.

This model is proving successful and reliable, leading to better performance by alternative lenders. And of course, the alternative data model generates hope for small businesses and startups who do not have a stellar credit score.

Greater Flexibility And Fewer Hassles

The alternative lending industry provides yet another benefit of greater flexibility. Since they aren't banks, they have no capital requirements like traditional banks and are mostly unregulated by the federal and state governments. This allows them to offer greater flexibility to their borrowers in the form of repayment schedules and exemption from collateral.

Companies like Cresthill Capital receive excellent reviews for their collateral-free flexible small business funding. Less documentation further accelerates the process. This flexibility and fewer hassles are like the holy grail for startups looking to expand operations but face restrictions in the form of collateral unavailability.

The alternative lending industry is no doubt helping medium and small enterprises boom. They are facilitating easy credit flow to the sector that has largely been dealing with capital constrictions. And with the dawn of a new decade, the modern technology-driven alternative credit industry brings more hope for them.