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Guest article by Carlos Sanchez. Carlos is a BlueVine account executive. When he’s not advising business owners on their cash flow needs, he enjoys playing and watching soccer and spending time with friends and family.
As a small business owner, the day may come when you turn to outside sources for financing. Perhaps you’ve run into a cash flow problem and need a small business loan or line of credit to tide you over. Or you may be expanding your business and want a partner who can help you pay for the upfront costs.
Traditionally, small business owners have turned to local banks or credit unions for funding. Working with a bank is still a popular option. But business owners may not meet stringent borrowing requirements or they may need the funds quicker than that application process allows.
More recently, alternative online business lenders have made borrowing money easier and quicker, although it’s important to understand how these new forms of financing are different from traditional bank loans.
You’re borrowing money to help your business thrive or grow. Where you get financing can matter. Traditional banks and alternative lenders each offer their pros and cons. The general differences can be broken down into four areas:
There’s no single best source of small business loans. However, there are a few guidelines that you can follow.
If you qualify based on your credit score and time in business, don’t need money quickly, and don’t mind the time it takes to complete an application, a traditional bank loan could offer you a lower interest rate, higher borrowing limit, or better terms. If you need funding quickly, want a simple and quick application process, or don’t meet the bank’s qualifications, consider an alternative lender.