So you’re a business owner in the transportation or construction industry and got denied for a loan by the bank? What are your next steps? In this guide, we’ll show you how you can still get financing — and at a much faster pace than a traditional bank loan.
Banks are usually harder to get a loan from due to their strict requirements for credit score, time in business, and minimum yearly revenue. While the process with a bank is slower and full of paperwork, they do indeed provide the best interest rates.
Many business owners these days opt to skip the bank and go straight to an alternative lender like Clarify Capital, Headway, or Fundera. Let’s look at the pros and cons:
Advantages of getting a loan from an alternative lender
1. Quick funding
Unlike banks, an alternative lender can get you money in the bank within 1-3 business days. Their application process has little to no paperwork. All you need to provide is 3-6 months of bank statements to apply — and let them do the rest of the work. Which frees up your time to focus on running your company.
2. Low credit score requirements
Even if you have bad credit, you can get approved for a transportation business loan. Do note that the lower your score, the higher your interest rate will be. Other factors do get looked at for them to calculate your offer (like time in business and average monthly revenue).
3. High approval rates
Unless your credit rating is below 450 and you have $0 in revenue, you can find an alternative lender that will approve you.
Disadvantages of getting a loan from an alternative lender
1. Slightly higher interest rate
Nothing will beat a traditional bank in terms of the APR. But that lower APR comes with other costs — your time. Most business owners don’t have the time to spend several weeks or months going through a lengthy loan application while still having to focus on running the company. The average APR with an alternative lender usually starts at 7%-10%.
2. Shorter term lengths
A construction loan from an alternative lender will likely have a term length between 6-18 months. Banks can usually provide longer loan terms.