Learn the benefits of using a direct funder over a broker
June 22, 2022It is crucial for any business to have convenient access to finance in order to grow and develop. Whether you're just starting out, or you're scaling up, access to funding is imperative. There are a variety of options available to small businesses. There are numerous considerations, benefits, and disadvantages associated with each of them. Here, we take a deep look at the pros of working with a direct funder.
To finance their expansion, new premises, or vital equipment, businesses traditionally turned to banks. However, traditional funders are finding it increasingly difficult to approve business loans. As a result, small business owners have begun to look for other financing alternatives.
A direct funder is a company that lends money to customers directly, this means that when you apply for a loan with this organization, the money that you're given comes directly from the organization's bank account. Instead of acting as a broker, who normally charges an application fee for their service, a direct funder offers loans without any additional fees or charges.
On the other hand, a broker connects customers with other people and organizations that wish to lend money. Your information will be passed on to potential funders, who will contact you if your loan application is approved.
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Due to the fact that direct funders control their own lending criteria, they are able to make funding decisions quickly. This allows them greater control over which customers get the funds that they're seeking. One of the main benefits of using a direct funder is how simple the transaction is. It is clear from the start that you are dealing directly with the funders. Some additional benefits may include:
Better cost of capital and conditions:In an effort to serve their customers efficiently, direct funders understand the need for quick loans and do not require lengthy applications. Often, a direct funder will approve the loan within minutes or hours, and the money will be deposited into the customer's account the next business day. The direct funder only requires basic information from you and does not check your credit score.
Easy access to financing:Direct funders consider lending to businesses that cannot obtain financing from a traditional bank. Banks generally turn down more business loan applications than they approve. This is because lending to small and medium-sized businesses involves more risk relative to the expected returns. Direct funders manage risk and return differently. In doing so, they do not just fill a gap in the financial services market. They enable businesses like yours to grow.
Single point of contact - fast cash release:Direct funders handle the entire process from start to finish. Your application is received, reviewed and approved by the same company that originates the loan. As a borrower, you benefit from shorter approval times and faster access to your funds.
This is a significant advantage over traditional financial institutions, which can take weeks or months to review your business's application. Time is of the essence for small business owners to take advantage of growth opportunities.
Flexible loan terms:Direct funders are not bound by restrictive guidelines and can adjust loan terms to fit your circumstances. As more direct funders enter the market, borrowers have access to a wide range of cost of capital and repayment terms. As a small business, you can find financing that fits your situation.
Direct funders do not work with middlemen:This means you do not have to pay a commission to a broker or intermediary. If you have a poor credit score, it's usually difficult to get a loan from traditional funders like banks. In these cases, applying for a loan from a direct funder can be a big help.
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Is direct lending right for your business?
Since access to traditional bank loans is more difficult for smaller businesses, direct lending offer a viable alternative. Businesses benefit from fast review and processing of loan applications and flexible terms.
Most direct funders are small, agile businesses, making them a better fit for many growing companies. However, because direct funders are not as tightly regulated as traditional financial institutions, it's important to do your due diligence. This includes thoroughly checking a funder's references and the terms offered.
The good thing about working with Ameriquest is that we can help you find the best solution for your business. We can offer direct lending solutions as well as arrange your financing. Apply for a flexible financing solution today and let one of our experienced financial experts help you.