Business Education

Small Businesses are Increasingly Turning to Alternative Lenders – Here’s What You Need to Know before Borrowing

Even before the collapse of Silicon Valley Bank or SVB, there was a tightening in the commercial credit market. Post-collapse, small businesses have found it increasingly more difficult to secure capital from traditional lenders. Still in need of cash infusions and lines of credit, small businesses are turning to alternative lenders.

Advantages and Disadvantages of Borrowing from Alternative Small Business Lenders

Alternative small business lenders are non-bank lenders that provide financing to small businesses. They offer a variety of loan products, including term loans, lines of credit, and equipment financing. Alternative lenders often have more flexible lending criteria than traditional banks, making them a good option for small businesses that may be turned down for a loan from a traditional lender.

Of course, even though all of this sounds good, there are reasons small businesses have historically relied on traditional lenders. This is due to the fact that there are not only upsides but also, downsides to using an alternative lender. So, let’s take a look at the pros and cons of borrowing from alternative lenders.

Pros of Borrowing from Alternative Lenders

Faster approval and funding. Alternative lenders often have a streamlined application process that can be completed online or over the phone. This can lead to faster approval and funding, which can be critical for businesses that need money quickly.
More flexible terms. Alternative lenders may be more willing to work with businesses that have less-than-perfect credit or that are in the early stages of growth. They may also be more willing to offer loans with longer terms or lower interest rates.
More options. Alternative lenders offer a wider variety of loan products than traditional banks. This includes term loans, lines of credit, and merchant cash advances.
No personal guarantee required. Some alternative lenders do not require a personal guarantee from the business owner. This means that the business owner’s personal assets are not at risk if the loan is not repaid.

Although these are some quite compelling reasons to seek out capital from an alternative lender, there are also a few considerations you should take into account so you have a better understanding of how these lenders work.

Cons of Borrowing from Alternative Lenders

Higher interest rates. Alternative lenders typically charge higher interest rates than traditional banks. This is because they are taking on more risk by lending to businesses that may not be as creditworthy.
Shorter terms. Alternative lenders often offer loans with shorter terms than traditional banks. This means that the business owner will have to make larger payments over a shorter period of time.
Hidden fees. Some alternative lenders charge hidden fees, such as origination fees or prepayment penalties. These fees can add to the overall cost of the loan.
Less customer service. Alternative lenders may have less customer service than traditional banks. This can make it difficult to get help if you have questions or problems with your loan.

Now you have a better idea of what to expect from alternative lenders, you are more informed about your options and this will give you additional choices. Taking it a step further, you should also consider the following if you are in need of a line of credit or some operating capital.

When to Borrow from an Alternative Lender

Alternative lenders can be a good option for small businesses that need money quickly, have less-than-perfect credit, or are in their early stages of growth. However, it is important to carefully consider the pros and cons before choosing an alternative lender.

If you are considering borrowing from an alternative lender, be sure to shop around and compare rates and terms from multiple lenders. You should also read the fine print carefully to understand all of the fees and conditions associated with the loan.

Interested in learning more about business? Then just visit Waters Business Consulting Group to learn more about us and the services we offer.

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Is Your Business Charging Enough for its Products and Services? Probably Not. Here’s Why…

September 30, 2021 No Comments

“Sure, we lose money on every sale, but we make up for it on volume.” This witty saying is often repeated in the business world because it effectively demonstrates a fundamental flaw with a company’s operating model. But, like any really good bit of humor, it contains an undeniable truth. Plus, it is probably applicable to your own business in an abstract way. If you have ever wrestled with raising the prices you charge for your business’ goods and services, then now is a great time to resolve that issue. Why Businesses Don’t Raise their Prices Although large corporations and big companies do raise their prices fairly routinely, small business owners are averse to doing the same. It’s not because small business owners aren’t smart operators, it’s merely the fear of the possible repercussions. Perhaps the biggest objection is that maintaining lower prices attracts new customers and greatly influences repeat business. While this might be ostensibly true, it can’t exist in perpetuity. A major part of running a successful business is knowing at what price to value your services or products. Entrepreneurs and business owners must ensure a balance in price between costs and gains. While low prices are certainly an attractive selling point, a variety of factors can bring pressure to bear on your bottom line, necessitating a higher charge for your services. —Forbes.com Another reason small businesses don’t raise their prices is that they’ve become so accustomed to their charging schedule. Though it sounds like a cop-out, it’s just the comfort of complacency that allows them to dismiss the notion of increasing their prices. Then, there are the logistical factors that come into play, which is particularly true in retail, where items must be individually updated, along with point of sale systems. Three Compelling Reasons Businesses should Charge More Even though most small business owners would gladly welcome a pay bump in their bottom line, they avoid increasing what they charge because they fear it will result in a loss of customers. However, this only looks at one side of the equation. Here are three compelling reasons why businesses should charge more for their products and services: There model is outdated. It’s a real accomplishment to stay in business for years on end. Everyone knows the statistics, that a high percentage of businesses fail in the first two to three years. But thereafter, they become not only viable but probably profitable enough to sustain a few sets of disruptive circumstances. Since business owners always experience ups and downs, they find a great deal of unconscious comfort in their pricing models that they established at the outset. But, as years go by, prices should go up incrementally to keep up with the times. There’s a lack of other service providers. The very fact that so many businesses fail, compounded by the shutdowns resulting from the global pandemic, means there are likely fewer service providers around right now. This represents a prime opportunity to market more aggressively, raise your prices, and build out quality staff. If you don’t, you’re missing a key moment that you’ll probably regret in the future. The cost of doing business just keeps rising. Of course, everything costs more now than it did just a short time ago. It’s not just the shortage of materials that the world is currently experiencing, but also other dynamics, such as inflation, the always rising costs of employee benefits, insurance, rent, and just about everything else associated with the cost of doing business is going up. What other reasons warrant raising prices? Please take a few minutes to share your thoughts and experiences so others can benefit from your input! Interested in learning more about business? Then just visit Waters Business Consulting Group.

Stress Points Entrepreneurs Should Avoid

May 24, 2017 No Comments

Being an entrepreneur means being able to pursue a dream, to fulfill a passion, and to realize your full potential. It’s also a stressful role, even for the most intelligent and resourceful. Though we like to think of stress as just an inconvenient emotion, it can take a substantial toll on your health. It’s linked to heart disease, obesity, depression, headaches, gastrointestinal problems, and more adverse health conditions. It’s also one of the most common conditions in starting a new venture or continuing to build a business. However, it doesn’t have to get the best of you. Stress Points Entrepreneurs should Avoid Stress is actually a biological response to certain conditions and situations. It consists of releasing hormones, including adrenaline and cortisol, which cause the body to physically and emotionally respond to its environment. In an entrepreneurial role, you’ll have a lot invested, which can include your personal savings, time, and effort. What’s more, you’ll be responsible for managing others. That’s certainly conducive to causing stress and you need to be equipped with the right response to make the right decisions. In the business world, there’s a certain cache attached to being able to soak up all that stress. But people can’t keep putting themselves under a lot of pressure for a long time without consequences. Eventually something’s going to give. —Entrepreneur.com When you’re an employee, you deal with stress but it rises to a whole other level when you are running your own business. After all, it is you that’s “calling the shots,” and you are at the helm of the enterprise. Stop to think about the entire situation and it can be practically paralyzing. You’ll definitely have a lot to deal with when you’re running or starting a business and one of the single biggest challenges to overcome is how you deal with stress. Because of this, you should know the most common stress points and how to cope with them effectively: Capital. Money is essential to business, but there will definitely be times when cash flow is anemic. You should learn to use free and low cost resources when money is lean. For instance, you can pay a freelancer that’s just starting out, or, can take-on a little more personally to keep costs down. Promises. As a business owner, you’ll make promises on a regular basis. When an unexpected event takes shape, it can seriously throw-off your working timeline. When possible, you should rearrange your schedule and revisit your priorities to make good on your promises. Commitments. Alongside promises are your commitments. When starting or running a business, it’s often tempting to fully load your schedule to help build your brand. This can take its toll, so, think about what’s most important and only commit to these. Clients. While clients are the lifeblood of your business, early on, you’ll probably take anyone who comes across your radar. Over the course of running your business, it’s helpful to reexamine which clients are worth the effort and which are making your journey an agonizing proposition. Talent retention. Having talented people on your team is key to success but this comes with a cost. Said cost rises as time goes on and you’ll face one or more moving-on sooner or later. Instead of fretting over the loss, look at it as an opportunity to forge a strategic partnership. Though these are all real and can be large problems, one stress point is particularly painful: the unknown. As the saying goes, “you don’t know what you don’t know.” That however, is true with just about everything in life. Instead of letting it worry you, look at it as a new opportunity to embrace. Even if you fail at this or that, it serves as a lesson learned which helps to make you a better leader. Remember, we learn far more from our failures than our successes because it’s easier to deconstruct. Want to find out about what a business coach can do for you? [shareaholic app=”follow_buttons” id=”26833294″]

Biggest Mistakes to Avoid when Selling a Small Business

April 14, 2022 No Comments

When it comes time to sell your small business, you want to make sure that you avoid making any major mistakes. If you wait too long to sell, you may miss out on a great opportunity. If you don’t find the right person to represent your business, you could end up selling it for much less than it’s worth. And if you don’t market the business for sale, you may not get the best price. In this article, we will discuss five of the biggest mistakes to avoid when selling your small business: Not finding the right person to represent the business: If you don’t find the right person to represent your business, you could end up selling it for much less than it’s worth. It’s important to find someone who knows how to negotiate and who has experience in selling businesses. Otherwise, you may not get the best price for your business. Most sellers don’t expect the exit from their company to be easy, but many are surprised by how difficult it can be to sell their business for a good price in a reasonable timeframe, especially in the current economic environment. It’s important, however, to not let frustration get in the way of maximizing your sale. —Entrepreneur.com Before you speak with a business broker, it’s highly advisable to get your corporate affairs in order and understand the process. An experienced business consultant can help with these and much more. The bottom line is, that you need to know key details in order to identify the right buyer. Forgoing marketing the business for sale: If you don’t market the business for sale, you may not get the best price. You need to let people know that the business is up for sale and you need to promote it in order to attract potential buyers. You want multiple buyers interested in making offers so that the demand drives up your selling price. This doesn’t mean spending copious amounts of money. But, it does mean advertising smartly to the right people. Asking too much or too little for the business: If you ask too much for the business, you may not get any offers. If you ask too little, you could end up selling the business for less than it’s worth. It’s important to find a fair price that will attract buyers but that won’t leave you feeling like you’ve given away your hard work for nothing. Conversely, if you put it up for sale at a discounted price, otherwise interested buyers might think you’re trying to sell to get rid of a headache. Selling to the wrong person or other company: If you sell to the wrong person or other company, you could end up regretting it later. Make sure that you know who you’re selling the business to and that they are someone who will be able to take it in the direction you want it to go. In other words, someone who shares your business values and approach. Otherwise, you could see your beloved creation turn into something you would never want it to be. These are just a few of the biggest mistakes to avoid when selling your small business. By following these tips, you can help ensure that you get the best price for your business and that you don’t end up regretting the sale later on. If you have any questions about selling your small business, please feel free to contact us anytime! We would be happy to help! Interested in learning more about starting, running, buying, or selling a business? Then just visit Waters Business Consulting Group.