When it comes to taking a loan, there are a number of different options to consider. While the traditional route of the bank is often one most people choose, it isn’t necessarily the best one for you. There has been a rise in private business lenders in the past decade, as many people turn away from the banks and their strict rules and guidelines, in the hope of finding a lender who has better loan terms and conditions. As a result, there are now a number of private business lenders to choose from, but the question to ask is: are they the right choice?
What is a Private Business Lender?
Firstly, let’s take a look at what we mean when we discuss a traditional lender. Banks are a great example of a traditional lender that is regulated thoroughly, meaning there is often a lot less flexibility when it comes to applying for and taking out loans.
A private business lender is a company that loans you money. This could be for any transaction from a mortgage through to a simple personal loan. They are also known as non-traditional lenders, in comparison to banks and other financial institutions. There are both pros and cons with choosing a private business lender, so let’s take a look at these.
Private Business Lender Pros
When it comes to choosing a private business lender, you want to weigh up the pros and cons to decide if they are the right option for you. Here are some of the advantages of going this route:
- Easier to quality for: if you have bad credit, it can be hard to even get seen by a bank, let alone get approved for a loan. Private lenders are usually more likely to overlook your bad credit and put in place other terms to help you qualify for a loan. Whether you came into bad credit through mismanagement of money or went through a tough period, private business lenders offer the perfect chance to get back on your feet and change this around. Of course, you want to ensure you can meet the repayments on time so you don’t end up in an even worse position.
- Competitive rates: private business lenders are in competition with each other, which results in cheaper lender rates for you and they tend to have lower ongoing fees than banks as well.
- More personal experience: private business lenders often offer a more personal experience. You aren’t handing paperwork through the loops and in-between departments passed around like a number. Instead, you are dealing directly with the lender who knows your circumstances and is all too willing to be flexible in their approach. They are also less regulated than banks, which allows them to offer more customisable loan options.
- Faster: private lenders have fewer hoops to jump through when it comes to the loans process, so you can often get approved and have the money in your account much faster than you would with a bank.
Private Business Lender Cons
At the same time, there are a few negatives that come with using a private business lender to take out your next loan. These include:
- Shorter payback period: private business lenders are often looking for a quick turnaround on their investment, so as a result they often offer shorter payback periods than banks and other institutions. This means they may not be the best option if you are looking at taking out a mortgage or a longer-term loan.
- More volatile: private business lenders are more affected by the market, which means in times of economic turmoil, they aren’t nearly as reliable as a traditional lender.
- Higher interest: private lenders often come with a higher interest in comparison to banks, making them a more expensive option. This can often be countered by choosing a secured loan where you offer up an asset, such as your home or car, as collateral for your loan, depending on the amount you are borrowing.
Which One Is Right For Me?
A private business lender is a good option when it comes to taking out a loan. Whether you have a bad credit score and have had no luck with the banks, or are simply looking for a more personal option for your needs, they can provide a great service. Like anything in life, it is important to do your research, as every private business lender is different, and so are their terms and conditions.
Taking Out A Loan With Private Business Lender
If you are ready to take the next step and take out a loan from a private business lender today then get in contact with the team at ALC Commercial. We will be all too happy to talk you through your options and help tailor a loan to your needs. Get in touch today.