The 2016 Small Business Credit Survey revealed that only 40% of small businesses received the full loan amount they sought. If you are looking to invest, you will likely need a loan to afford that property or business share, but how can you guarantee to a lender that your return will be enough to repay the loan with interest? Often traditional banks will reject a loan application due to the low credit rating of the business. Fortunately, there are some great alternative lenders available if you don’t have access to a credit repair service or a company that can help repair your credit.
American home ownership is at its lowest level since 1965, with investors struggling to gain access to a mortgage. With high street banks offering interest rates which are unaffordable to many first time buyers, there has been a growth in direct lenders. In 2016, they had $54 billion in funds to lend out.
Direct lenders can offer cheaper rates to investors by cutting out the middleman, offering their services online and waiving administration fees as well as the costs of an investment bank, broker or private equity firm. As a result, investors are now more able than ever to acquire a cheap loan, meaning that there is a lower risk that they will be unable to pay it off. For example, like in Norway, there are now online lenders dedicated to granting loans to investors with poor credit.
Peer to Peer Loans
Another increasingly popular form of alternative lending comes from peer to peer loans. Since 2010, peer to peer lending has experienced explosive growth of over 7,000%. Online services match lenders looking to make a profit with borrowers who have poor or no credit scores. By operating entirely online among private individuals, this cuts out many of the overhead costs of traditional lending companies.
These savings can then be passed onto investors looking for a loan to finance their investment projects. So if you have bought a property and are looking for funds to renovate it in order to resell, a peer to peer loan in 2017 could be your best option. There are over $1 billion in private funds waiting to be granted to small and medium businesses.
Following the financial crash and global recession, investment became a far off dream for many people. Now, with the economy recovering, alternative lenders are taking over the market place. By cutting out administration and middleman costs, it is becoming increasingly easy to secure the funding that investors require.