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Private lenders are called the alternative financing system that exists for small businesses. They are private companies that are dedicated to commercial financing and that are an alternative to traditional banks. Where is the main difference? In the speed of funds and in the closeness and empathy of the process they have with customers.
The main actors in this system of private loans are:
- Online Lenders. Which are basically sources of financing that use technology mainly as a means of approaching and processing with customers, making a process, in general, friendly and fast for the business owner?
- Peer to peer funding. It is a financing system that connects investors who want to obtain performance or financial profit with people who need financing. Normally the process is digital and with friendly customer service.
- Crowdsourcing It is a source of financing in which money is raised for causes, initiatives or projects. You raise your project or initiative on one of the crowdsourcing platforms and you can raise funds through the platform.
- Microfinancing Or microloans, they are small loans that normally go in the range from $. 500 to $. 10,000 that is destined to make a seed capital that initiates a project or financing.
- The invoice trading or factoring. It is the market that buys and sells invoices receivable, as a source of commercial financing, converting into cash the flows to receive that a company has.
The main financial products or types of financing that you can get through the private market are the following:
to. Term Loan They are fixed-term loans, that is, they have a specific term of repayment. Within this category you can find:
- Short term or short term (from 3 to 18 months).
- Middle term or medium term (from 18 to 36 months)
- Long term or long term (from 36 months)
b. Line of Credit. In a revolving financing system, that is, you can use, pay and reuse.
c. Invoice Financing. It is a financing tool with which you can get money through your bills that you have receivable. In this link, you can know about what Factoring or Invoice Financing is.
d. Merchant Cash Advance or Trader Cash Advance. It is a financial tool that allows you to obtain financing or capital from your business through the money you have to receive in your business on credit cards. If you visit ACFA Cashflow, you can know more about merchant cash advance.
The world of private financing is a broad world and, in some cases, it can be complex, to help you understand it better and to obtain the most adequate financing for your business. We work every day in Riley, so if you want to start your loan process click here.