Following the global financial crisis in 2008, a lot of banks and credit unions became overly cautious about lending. This made it difficult for small businesses to get bank loans and almost impossible for those without a perfect credit score. Since then, FinTech companies have been filling the gap left behind by conventional funding sources, and Chad Otar has been one of the industry leaders.
Who is Chad Otar and Lending Valley
Chad Otar has been involved in several companies that provide funding for small businesses. In 2013, Excel Capital was founded where he served as the CEO before launching Lending Valley later on. Today, Lending Valley has become a leading FinTech company and has even been featured on several tech publications like Forbes, Fast Company, TechCrunch, etc. The company acknowledges the challenges entrepreneurs are facing in starting their businesses and receiving funding.
So far, the company is proud to have provided small businesses with over $3 billion in funding. All you need to do is fill an application from their website and their experts will get back to you with several options to choose from. Once approved, your funds can be acquired in various ways.
1. Small business loans
The most common reason why small businesses fail is that they lack funding to keep the business operational. Therefore, Lending Valley has provided several ways for your business to receive funding to expand, buy supplies or whatever else you need. Some of those to consider are:
- a) SBA loans – the US Small Business Administration provides security for small business loans through various lenders including Lending Valley
- b) Term loans – these are the most common form of loans where you receive a lump sum that is paid over a period of time
- c) Line of credit – you can chose to receive a line of credit from which to draw funds as needed to finance various operations
- d) Equipment and invoice financing – use your assets and invoices as collateral to receive a loan
2. Unsecured business loans
When you request for a business loan, they will most likely ask for collateral against your loan. Collateral can include any asset you have in your business such as property or equipment. The collateral is used as security for the loan by the bank to offset the risk they are taking by lending you money. That also means that they can seize the asset used as collateral if you’re ever unable to pay back the loan. Considering that not all businesses end up how you intended, taking out a secured loan at a bank can be quite risky. Instead Lending Valley offers unsecured loans that don’t require any collateral.
However, it is important to note that unsecured loans are a bit different from the conventional loans received from a bank. A bank loan involves receiving the amount applied for in the application deposited into your bank account in a lump sum that is paid back over a period of time plus interest. Unsecured business loans on the other hand are more similar to a line of credit where you do receive the amount of money you needed but not all at once. This way, you can always draw from your loan for as long as you need it. The obvious advantage with unsecured loans is that you only get to borrow what you need rather than being tied down to a huge loan you don’t need.
3. Bad business credit loan
Most banks would not even consider extending a loan to an individual or business without higher than average credit score of about 630. What most people don’t realize is how easy it is to receive a negative notch to your credit score and lose some credit points and, subsequently, be denied a loan. Furthermore, a startup without a long credit history might also be denied a business loan for lacking an extensive financial record. So what are these businesses supposed to do when they need funding.
Lending Valley also considers this reality and thus have provided several ways for businesses with bad credit as low as 500 to get loans. These are:
- a) Short term business loans – usually paid over a short period between 3 and 18 months but has a high interest rate
- b) Short term lines of credit – similar to short-term loans but applicants can draw from the line of credit as needed and not as a lump sum
- c) Invoice financing – use already issued invoices as security for your loan as you wait for the customer to pay. These have a lot of appeal to lenders and have lower interest rates
- d) Merchant cash advances – although not technically a loan, you get to receive a lump sum of money that you pay back from the sales you make daily by credit card
Aside from being a source of funding for your business, these loans also give business owners the opportunity to rebuild their credit scores and qualify for bigger loans with more favorable rates.
4. Merchant Cash Advance (MCA)
MCAs are not only available to businesses with bad credit, but also to those that need quick funding. Unlike conventional loans that take weeks to be approved, merchant cash advances can be approved even within 24 hours. This makes them ideal for emergencies that are bound to occur at any time. Payment for the loan is automatically deducted daily as a percentage of the total revenues earned by credit card sales.
