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Finance & Accounting, Small Business Loans

When Platform Lending is Right for Your Business

Platform Lending

A large order just arrived from your number one customer. While this particular customer has enabled your business to earn more profits than you ever thought possible, they now want to pay net 90. This means that it takes a full three months for your customer to pay the invoice. While you do not like these terms, you have no choice but to accept the order to keep the client happy. 

However, there is one huge issue with taking the order. The problem is your suppliers need to be paid upfront for the materials to fulfill the order. Not to mention your employees who get paid weekly and the host of other monthly bills that seem to become due at the wrong time! To put it bluntly, you simply don’t have the capital available to cover all your expenses and fulfill the large order.

The Need for Fast Cash

The above scenario and others just like it play out on a daily basis across the world of small business. There are countless reasons why businesses of all sizes need a fast cash infusion. As a business person, you know exactly what I am talking about.

Cash is the lifeblood of business. It is what enables growth and without it, every business would just wither on the vine and die. In the past, small business owners would go to their local bank for a loan whenever the need for capital surpassed available resources. As you know, this can be a time consuming and very uncertain process.

Challenges with Traditional Lending

Traditional banks demand a ton of paperwork, collateral and even personal information. Believe it or not, personal background checks are usually required. Also, bank lenders can require financial statements of your company’s management team. Not only that, but most banks require a high personal FICO score. 

Many businesses simply do not qualify for the traditional bank route to a loan. Even the Small Business Administration (SBA) guaranteed loans have onerous qualification demands. Add a long wait time to find out if you are approved and it paints a very bleak picture for the small business person who needs money fast.

The overall economy has also made if more difficult for small business people to obtain must-have funding. Ever since the 2008 financial crisis, small business financing has become tough to get. Even successful businesses are being turned down in record numbers as traditional sources of funding have become extremely risk-averse.

A Need for Change

Don’t feel alone if you have experienced the sting of being turned down for a conventional small business loan. Despite banks massive marketing for small businesses, there is a serious disconnect between the marketing and being approved.

Fortunately, there is a new wave of small business lenders who have stepped in to help business people get the money they need. Rather than focus on the small business owner’s personal credit and collateral, platform lenders look at a variety of business metrics to make the approval decision.  

The Rise of Platform Lending

Platform lenders remove the complicated qualification requirements and streamline the lending process for small business owners. In other words, they take business loans into the 21st century. Everything is done online without having to take the time to go to a local office. While the rate and terms are based on your credit history, platform lenders use other business metrics for the approval decision. 

Kabbage, for instance, has no application fee and provides credit decisions right away without requiring long forms or waiting for a manual decision. You can be approved for up to $100,000 as a credit line that can be drawn upon as you need the money.  You only incur fees on the money that you actually use, and you can draw funds at any time.

It is the ability to process data at a rapid rate that provides platform lenders the ability to make credit decisions in a fraction of the time it takes traditional lenders. The data can come from connected data sites that your business uses on a daily basis, like PayPal, Square, Business Checking, Etsy and Amazon. 

How You Can Benefit from Platform Lending

Perhaps the best thing about platform lenders is that no collateral is required for the loan. This means that you will not be asked to sign over your business, home or vehicles to qualify for the credit line. 

Small businesses can use platform lenders for a variety of cash flow needs. For example, seasonal businesses use loans to provide working capital during the slow or off seasons. Businesses like landscapers do most of their business during very particular times of the year. Seasonal merchants can use platform lenders to make it through the slow periods.

Restaurants that are in the process of an expansion or that simply have good or bad months can use platform lenders to maintain a steady financial picture regardless of the cash flow cycle.

Even franchisees have a need for platform lenders. Franchises have a variety of fees and costs regardless of whether business has been strong or weak, not to mention the steady stream of working capital that’s always required for any small business. Platform lenders are used to assisting franchisees through the slow times and whenever outside funding is necessary.

 

Platform lenders are a quick and reliable funding option. Platform lenders have the ability to address a range of business expenses and serve a variety of industries. If you work for a small business and would like to be able to cover all of the business expenses that come your way, consider platform lending for your cash flow needs.