Feb 04, 2013 Sean Albert
In the years following the Great Recession, alternative financial services have been crucial to keeping businesses in operation and helped them expand despite turbulent markets. One of the first economic segments to fall out as a result of the recession was the traditional lending sector, and this served a serious blow to small, medium and large businesses in nearly every industry.
As most business owners will cite accessibility of credit as the most crucial component of keeping operations running smoothly and maintaining revenues, alternative lending has become a much stronger prospect for most executives. This growing demand has led to an increase in alternative lending services, and as such boosted competition in the industry, improving the potential deals business owners can find when conducting adequate research.
Why alternative lending?
Forbes recently reported that between 2008 and 2011, commercial loan disbursement values from traditional lenders dropped by 21.6 percent, representing $104.5 billion less credit available to small business owners. The source asserted that this meant 5.89 million would-be businesses could not receive the credit they needed to open or expand operations.
This type of problem reverberates through a variety of market segments, as small businesses comprise a majority of employment prospects, gross domestic product (GDP) and patent awards in the United States. In this case, the news provider explained that opportunity was the mother of invention, as alternative lenders stepped up to fill the gap left by decreasing traditional resources for business owners.
According to Forbes, several alternative lenders have seen massive increases in application for loans throughout the past several years. By meeting this increased demand, the alternative lending industry has essentially kept the economy afloat, with small businesses receiving the credit they need to carry out operations despite a lag in traditional loan disbursement volumes.
The source added that while alternative financial services once had poor stigmas associated with the processes, competition and transparency have help small business owners see the power of such products.
Shopping for the best deal
Much like traditional commercial loan services, business executives must sift through the pool of potential alternative lenders to reach the most preferable deal. Different types of alternative lenders will have varied requirements, fluctuating rates and other complex issues. However, by conducting adequate research of all the options on the table, small business owners can ensure they get the funding they need in a quick, efficient and profitable fashion.