Table of Contents:
- What are private business loans?
- What types of private business loans are there?
- Why get a private business loan?
- How to get a private business loan
- Frequently asked questions
What are private business loans?
Private business loans don’t refer to a specific type of business loan.
Rather, it refers to any alternative business loan (i.e. a business loan offered by a lending institution other than a traditional bank) offered by a private lender.
Hence, the private in private business loans.
Private funding can include several different lending types, including:
- Crowdfunding and peer-to-peer funding
- Microfinancing
- And most of all, alternative business loans
Private business loans specifically offer one unique advantage of traditional bank financing: an alternative source of business funding.
And that funding is often easier to obtain or offers alternative qualification requirements, that combined allow you to potentially obtain funding for your business when otherwise you wouldn’t.
What types of private business loans are there?
As we said earlier, private business loans doesn’t refer to a single loan type.
In fact, there are many different kinds of alternative business loans you can take advantage of for a variety of purposes.
The one central quality of all alternative business loans is that they don’t have the same stringent credit requirements that traditional bank loans have, often requiring a 680-720+ credit score.
By comparison, you can be approved for most kinds of private business loans with bad credit, provided your business is in good standing.
Another common factor between all or most alternative business lending methods is their speed.
Most bank loans take weeks to get funded and the application process is long and arduous.
With alternative lending, funding is often approved within a mere 24-48 hours.
Here’s a quick sample of a few of the more common types of private business loans:
Term loans
Term loans are your traditional business loan with a repayment term on either a short term or medium-term basis.
Typically, repayment is set somewhere between 6 months to 2 years.
For term loans, you receive a chunk of capital and, in exchange, you repay that amount over your repayment term (depending on what you were approved for).
As with most alternative business loans and other funding methods like lines of credit, the amount you’re approved for is based on several factors centered around the complete health of your business, as opposed to simply your credit score.
Business line of credit
Not technically a business loan but a business financing method, a business line of credit is essentially a form of recurring financing.
As opposed to getting access to a single amount of capital, you get access to a set amount that you can tap into repeatedly upon payment of your balance, very much like a typical credit card.
Merchant cash advance
A merchant cash advance, or MCA, is an advance of capital in exchange for a percentage of your future sales.
So, as opposed to a term loan where you repay the loan over time on a set repayment schedule, with an MCA that repayment is done automatically through your daily credit card batches.
Each time you batch out, a set percentage of your business credit card sales is put aside to repay the MCA.
This makes MCAs particularly well-suited for businesses that depend on daily debit transactions.
Invoice financing
Somewhat similar to how a merchant cash advance uses your future sales to secure an advance, invoice factoring uses your outstanding invoices as a kind of collateral to obtain financing.
With invoice financing, or invoice factoring as it’s often called, the factor or company which “purchases” the invoices from you then issues an advance for a percentage of the total invoice amount.
Once the factor receives the total amount (whether from a collection of multiple invoices or just one), the remaining amount is paid minus fees and interest.
Why get a private business loan?
So, why get a private business loan?
As touched on earlier, private or alternative lending solutions offer several unique advantages over traditional banking options.
Those include, most notably:
- Easier approval: Private lenders take into consideration the complete picture of your business’ health, not just your credit score. Because of this, you can often be approved for a loan or advance with bad or fair credit.
- Faster funding: Private lenders typically pride themselves on their speed as they don’t have to move through the same hoops that clog the bank loan approval process. Most alternative lending options fund in 24-48 hours.
- More options: Private lenders have a variety of funding options even beyond that which traditional banking institutions typically offer. For example, if you need funds but don’t have the money now to start paying off a loan but do have outstanding invoices, invoice factoring could offer you the chance at getting the funding you need when a traditional bank funding application might leave you without anything to show.
Get the funds you need without the headache– and fast– with Excel Capital
At Excel Capital, we know how much work it takes to run a business.
You have enough to deal with, you don’t want to stack the often painful process of applying for a loan that is often the bank application process on top of that.
Plus, what if you don’t have the credit?
You work hard each day to grow your business, and sometimes, just to keep it afloat.
Times change, sometimes there’s growth, other times you’re fighting to survive.
In both cases, a little extra capital may be exactly what you need to keep things moving forward.
That’s why we’re here to help.
We believe that the traditional process of jumping through hoops to be approved for a bank loan and needing stellar credit just to get approved is unrealistic for modern businesses.
That’s why we’ve designed a collection of flexible business financing options that offer everything you need, whether you’re looking for:
- A quick infusion of cash to pay the bills
- A seasonal boost to prepare for your busy time
- Or a large sum of capital in times of growth
Our application process is quick, simple, and easy.
Complete our online application and see how much you can be approved for:
Frequently Asked Questions
You can acquire a small business loan from several places, from a traditional bank to an alternative private lender or peer-to-peer lending institution.
In recent years, alternative private lenders have become popular as they’re not typically bogged down with the high credit requirements and slow application processes that are synonymous with applying for a business loan at a major bank.
Easy is relative when it comes to business funding options, but getting a loan from a traditional bank is generally much harder than with an alternative lender as credit requirements are stringent, typically requiring 680-720 or higher just for initial approval. Alternative lenders, on the other hand, offer business financing solutions on fair and even bad credit, provided your business is in good standing.
Nowadays, anyone can qualify for a small business loan, provided your business is in good standing. Traditional banking institutions require 680-720+ credit while SBA loans require 620+. However, alternative lenders offer financing solutions in the fair to bad credit range.
With Excel Capital, you can be approved for a loan up to $2,000,000, depending on various factors. Apply today to find out how much you can be approved for.
