The Difference Between Traditional Banks and Alternative Lenders
Whether you’re starting a new business or you need extra funds to grow an existing business, there is no shortage of options available. From traditional banks to alternative lenders like Barrington Commercial Capital in Alpharetta, GA, how do you know which option is best? Let us explain the main differences between the two, so you can make the best choice for your next business move.
What is a Traditional Lender?
Banks and credit unions are classified as traditional lenders. They’re considered “traditional” because they are well-established and have been around for ages. Historically, banks were the only source of capital for businesses and people who needed lines of credit. Because of this, banks tend to be very selective. They require high standards for lending, such as:
- Exceptional credit score
- Established business profile
- Minimum annual income requirements
In short, you’ll need a healthy, well-established business to get in the door with a bank.
However, there are certain rewards if your business does qualify. One of which is lower APR rates. Others include bank accounts, merchant services, and credit card options, some of which can also be obtained through alternative lenders.
What is an Alternative Lender?
Alternative lenders such as Barrington Commercial Capital in Alpharetta, Georgia, are considered non-traditional in that they don’t fit the typical bank profile. Alternative lenders are a good fit for businesses that cannot fit the strict lending requirements of traditional banks. The application process is much more relaxed.
- Fair credit score
- Younger businesses can apply
- Lower annual income requirements
The application process is much easier for businesses looking for funds versus traditional bank lenders. Not only is the process easier, but it’s also faster with higher approval rates.
So, how do you know which option is best? It depends on your business and your goals. For those with a company that meets the strict guidelines for lending, a traditional bank could be a good fit. For businesses that have trouble meeting this standard or perhaps need funding faster than the bank can turnaround, an alternative lender would be best. Also, alternative lending is great for young or new businesses that are not as established.
If you still have questions about what lending solution would be best for your future goals, please contact us by submitting a form online, email us at info@bccfirm, or give us a call at 404-602-9100. To stay up to speed on all things Barrington Commercial Capital, follow us on Facebook, Twitter, and LinkedIn. And lastly, sign-up for our monthly email to stay informed of the latest commercial capital options available to you and your business.