If your company has substantial funding requirements there are many ways to get it and one of these is senior debt financing. For the lender, these are low-risk secured loans having several contingency riders for repayment in order of priority. Hence, if you go bankrupt, paying off this debt will be the top priority. The other advantage of such loans is that they are collateralized. For the borrower, it is funding available at a low cost.
However, as a small business owner, you are going to find it challenging to get business funding from traditional lenders like banks and financial institutions. They have a different approach to the assessment of risk toward small businesses. It does not matter to them whether the funding mechanism is designed to be low risk or not. TheiSenior Debt Financing is an Excellent Mode of Funding for Small Businesses own assessment of risk with regard to small businesses will invariably prevail over all others.
What do you need the funding for?
Every company has its own unique needs for business capital loans and so does your organization. Running short of working capital is a common problem that businesses of all sizes face and not just the small ones. Payroll expenses are a critical part of working capital expenses and frequent delays in meeting this cost can hurt your business in the long run.
As a small business owner, you know very well that you not just need to grow faster than normal but also gain a larger market share in a quick time. In order to do that you need larger capacity which is only possible with more investments. Senior debt financing from alternative sources will provide low-cost funds on easy terms to help you meet your business expansion cost.
Fast approvals and flexible terms of lending
Where traditional lenders take a long time running into weeks and even months in some cases, to approve a loan, if you meet all their stiff conditions, alternative funding companies do it in a day. They mainly check your bank account statement to verify your cash flow and revenues as that would indicate your ability to repay the debt.
This is necessary to approve unsecured business funding but they also offer the option of secured and collateralized funding if you access it for capital equipment or commercial real estate procurement. If any funding mode costs less and offers easier terms, it makes a lot more sense to look it up for usefulness.
The Loans could be either secured or unsecured
Normally small businesses are not in a position to provide collateral of any substantial value as they have very little in terms of capital assets. For most small businesses, the mere availability of hassle-free business funding solutions is a blessing when compared with the dead-end they run into with traditional lending agencies.
One of the main obstacles that most small businesses run into when getting assessed by traditional lenders, is the provision of collateral. You may have excellent cash flow and great credit history but capital assets are something different. Even if you do have your own workplace, you won’t like to use it as collateral for small business funding when there are unsecured funding options available. Where traditional lenders take a long time running into weeks and even months in some cases, to approve a loan, if you meet all their stiff conditions, alternative funding companies do it in a day. However, as a small business owner, you are going to find it challenging to get business funding from traditional lenders like banks and financial institutions.