Whenever someone wants to start a business or grow the one they already have, the funding side is always an issue. A lot of work must be done to choose the right way for the company to get the money, from researching options, interest rates, terms, and conditions to applying and getting approved for a small business loan.
Traditional funding via banks is still an option for those people who have a good business relationship with big financial companies. Still, the innovative services provided by financial technology companies like Camino Financial in small business loans has changed the landscape for entrepreneurs.
This new channel for funding projects, whether it’s to open up an operation or to expand an already working one, opens up a world of possibilities. This doesn’t mean that banks are out. It’s just a matter of immediate financial needs and a way to solve them.
Profile your needs and choose your lender
There is not a magic formula that allows all businesses to achieve their financial goals, so every case needs to be evaluated individually, and a good way to start is to explore options and have a pro and con list of every financial product. You can get started with this information to choose a general road for your research.
The business credit history entanglement
Banks will lend money more easily to businesses with some records of previous use and payment. Fintech companies usually don’t ask for your credit history. If they do, they are more flexible about it. They are more interested in consumer behavior rather than a possibly non-existent credit score, which helps startups with funding to get up and running.
Paperwork
If there is something that can discourage someone from getting a process done is the paperwork, and banks usually require a lot of that, not only to be signed but just to get started. In the fintech world, things move a little faster, and, in so, they tend to ask for fewer papers to get you started. And it also helps that they manage to do everything in the digital world, which is more convenient to both customers and the company.
Leaner companies, less hassle
You can forget that banks are big old companies that comply with certain procedures and checkpoints established by authorities. This is the reason why they do everything they do, even if it seems just to annoy you with red tape. Processes can be harder and longer to go through.
For fintech, things are different since they work as leaner companies, with fewer regulations and the flag of innovation that can’t be completely framed into a tight setting. This not only allows the financial technology company to move faster, but it also helps to make faster choices in their operation.
Another thing to take into account is the conditions all small business loans present. For example, whenever a credit score is in the mix, interest rates can go up and down depending on the score and the applicant’s history. Still, fintech companies normally have a very straightforward catalog of products with fixed rates, conditions, and terms. You have to be mindful of that whenever you are making financial projections.
And thinking about that, a good business plan and a structured financial projection and income milestones for the company can do wonders when it comes to being approved by a fintech company.
You can get approved by a bank even if you are just getting started, but if you are new or struggling, you have a better chance with small business loans from fintech. Go on and try some choices out there. Remember that no one is obliged to sign in the dotted line if they are not comfortable with the offer, so ask around, compare and make your choice.
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