What Small Businesses Need to Know When Seeking Alternative Financing from Private Lenders
A recent article in the LA Times highlights business owners who have been turned down by banks and are now taking out 'hard money' loans, often at high interest rates. In the article Desperate for capital, small businesses turn to private lenders, Sharon Berstein examines how private lenders are able to support small businesses at a time when credit is scarce, providing loans that help borrowers fix their credit scores or buy equipment to expand. However, she also notes that the extra cash can come at great cost.
While I'm glad to see an article like this, there are a few things that I would love to see explored further. I have no intention on coming to the aid of the banks that are not making loans to credit worthy borrowers because of their structural and financial problems. However, we do not want to deride the alternative lenders for providing capital when needed.
What we need is a more efficient market where businesses are confident they are paying appropriate interest rates commensurate with their current risk profile. This is simply not happening and creating a dislocation in borrowing expectations. Here is where qualified advisors come into play, especially when they are also lenders and really understand credit risk profiling and are able to provide the appropriate capital or a lender for that risk profile. Sometimes part of the loan can be with the bank for low cost and the riskier portion is with a higher priced alternative lender.
With a skilled financial advisor, a business owner can be confident he has obtained the best financing terms even for an interim period, until he is able to go back into the low cost, low risk bank portfolio. So we really need to understand what banks are required to look for and set our expectations to reality and seek alternative lenders when appropriate and at market prices.
How can businesses make smart decisions about recapitalization and financial restructuring to continue securing working capital? If your business currently doesn't fit a bank's lending risk profile, you can learn more about how to secure Alternative Financing and Small Business Loans for Working and Growth Capital.
Since 1998, US Capital Partners has been providing prompt, innovative, and reliable financing solutions including lending, corporate financing, and debt re-structuring to businesses across the United States and abroad. We will give your business the attention it deserves and find the most suitable product for you. We offer true one-stop financing and will work in partnership with you throughout the lending process. If you would like to know more about how your business can secure the funding it needs, visit US Capital Partners, Inc. at http://www.uscapitalpartners.net/ or call (415) 882-7160.