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Friday, January 21, 2022

5 Reasons Why Flexible Lending Solutions Make Great Alternatives

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Sometimes, running a business can feel like an everlasting rollercoaster ride with more ups and downs than you can keep tabs on. When it comes to financing, you have a variety of alternatives to choose from, including equity loans, property-based loans, and SME loans, among others.

That said, what if you’re looking for a less mainstream option? That’s what makes flexible lending solutions something you should explore. 

Simply put, a flexible lending solution can give you a reprieve from the nagging bank procedures and methods. As a result, many Australian business owners find this option a lot more viable, and you might want to. 

In this read, we will acquaint you with the different flexible lending solutions you can explore. 

The A-Z of Lending Solutions

Reports suggest that by 2021, the Global Lending Market will have touched $6932.29 billion. And a large portion of it consisted of various types of versatile and flexible lending solutions. 

Unsecured Loans 

While most bank loans require you to pledge an asset as a payback guarantee, this is not the case with unsecured loans. Instead, these loans allow you to borrow significant sums of money even if you don’t have or are unwilling to place your assets at stake. 

By taking out an unsecured loan, you can significantly reduce the risk of foreclosure. 

Microloans 

Let’s say that you need money to finance a piece of equipment, replenish your stores, or make down payments for a new office space. If a small sum suffices, you can opt for microloans. In this way, you won’t have to shoulder the burdens associated with long-term loans. 

That said, you need to be cautious about the interest rates – they can get quite steep at times. 

Crowdfunding 

Lately, Crowdfunding has been ruling the roost in the lending market. Here, people agree to invest in your business, provided they get a decent share percentage. When your business makes profits, its share value increases. 

You can also get your customers to crowdfund a business initiative in return for an alluring reward in what will be a more straightforward approach. 

Pension-Led Loans 

Are you or your business partners entitled to a generous personal pension? If yes, this alternative lending solution might be for you. Here is how pension-led loans work: Let’s say that your annual pension is valued at $60,000. 

You can take a pension-led loan of around $12,000-15,000 (equal to 20-30% of your total pension). However, this option is not viable if you need a large sum of money. 

Development Loans 

There are many government initiatives under which new and fledgling businesses are eligible for development loans. Not only are these loans generous, but they also come with lucrative add-ons like a fixed interest rate, access to valuable resources, and a support ecosystem. 

Some notable Australian government grants include: 

  • The Entrepreneurs’ Programme 
  • The CSIRO Kick-Start 
  • The Export Market Development Grant 
  • The Austrade Landing Pad 

Do the homework, make a list of the schemes and grants you are eligible for, and avail a development loan. 

Apart from the flexible lending solutions mentioned above, you can also consider getting angel investors and venture capitalists funds. If your business is commercial collateral heavy, commercial mortgages are yet another option you can think about. 

The occasional high-interest rates aside, these solutions are modern, convenient and less risky. Are they in your good books yet?

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