By Mashum Mollah
It can be frustrating to get your loan application rejected by a bank. However, this is not the only funding option that you have. There are various kinds of businesses that qualify for alternative lending.
Back in November 2023, 13% of applications for traditional loans were approved. However, alternative lending solutions approved almost 30% of loan applications that month.
There are a number of options that you have if you have been turned down by a bank.
Alternate Lenders for Your Loan Application
If you have a business, it is important that you know about alternative lending, as in some cases, alternative lending or alternative lenders provide you with a more suitable financial outcome than traditional lending. Here are some of the best options mentioned.
Credit Union:
You may have an easier time getting a loan if you go to a credit union. Credit unions are typically community-based or affiliated with an employer. Credit unions are more likely to extend loans to people who have bad credit.
Your promise to repay and your character are some of the other factors that credit unions will take into consideration.
Online Lenders:
You should consider looking at online lenders. Avant and Lending Club are two of the most popular online lenders. The interest rates can vary.
The lower your credit score is, the higher the interest rates will be.
If you choose an online lender, then you will need to make sure that the company is reputable. Many online lenders will charge people who have low credit scores interest rates that exceed 100 percent.
Get a Title Loan:
If you have a car, then you may be able to get a loan against your car title. This is known as a title loan.
You will secure the loan by giving the lender your car title. You will also need to have a source of income. These loans are popular because they are fairly easy to qualify for.
Peer-to-Peer Lending:
Peer-to-peer lending is one of the newest forms of lending. It has been around since 2005. It is an online platform that allows you to get funding from a group or individual instead of an institution.
People who want to get a loan will need to post the amount that they need on the website. After that, investors can fund the loan.
Your credit score is one of the factors that will be considered. However, you will still have an easier time getting a loan because the standards are more lenient. You may also be able to get a loan for a lower interest rate. Additionally, the lender’s credentials are verified.
Get a Cosigner:
A lender may feel more comfortable lending to you if you have a cosigner. A cosigner should be someone who is financially responsible and has good credit.
Your cosigner will be responsible for making payments if you cannot. It is important to note that if payments are not made, then the cosigner’s credit score will also be affected.
If you make timely payments on this loan, then you will likely be able to get a loan without a cosigner in the future.
Home Equity Loan:
If you are a homeowner, then you can get a home equity loan. Your home will be used as collateral. Home equity loans typically have low-interest rates because your home secures it.
The disadvantage that comes along with getting a loan is that you can lose your home if you do not make the payments. However, this is an inexpensive way to get the funds that you need.
Personal Loans from Friends or Family
You could also consider borrowing money from friends or family. While this can be a less formal, straightforward way to get a loan, both parties must be clear on the terms.
Putting your agreement in writing and treating the loan as seriously as you would with a formal lender can help prevent any potential conflict.
Grants or Assistance Programs
Depending on your situation, you may be eligible for grants or assistance programs.
This can be particularly helpful if you are a student, a veteran, or have special financial needs.
Be sure to check with your local government or community organizations to see what may be available.
Credit Builder Loans
If bad credit is your main barrier to getting a loan, a credit builder loan might be your best option.
Credit builder loans are designed to help you build credit while you gradually get access to money.
Microlenders
If you need a small loan or don’t qualify for traditional loans, consider checking out microlenders.
Microlenders offer smaller loans to both individuals and small business owners who may not meet the requirements of larger financial institutions. Kiva or Accion are good organizations to investigate.
As you can see, when one door closes, other opportunities exist to finance your needs. Which option most appeals to you?
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