Small and medium businesses in Canada can sometimes face significant obstacles when trying to get loans from the big banks or traditional financial institutions.
Even healthy, profitable companies can find themselves rejected for small and medium-sized loans by the banks, and economic uncertainty can make this problem worse. The difficulty of getting a loan from a bank is not just a problem for small businesses – the same is true for individual Canadians that require mortgage lending services.
So why do big banks or credit unions reject loan applications for small businesses? Why do individuals struggle to get themselves a traditional mortgage to achieve their real estate dreams? The answer is related to risk.
Even small risks are sometimes too much for a bank to consider, even if you can prove that you are able to pay the money back over a certain period of time, and even if you provide collateral. When considering the added effect of the relatively new mortgage rules, ones that saw the inclusion of a stricter mortgage stress test and higher down payment levels, it is clear that another option is necessary.
So when you need access to financing and get approved in a timely manner, the question ultimately becomes: “What should I do? Where can businesses turn for an alternative loan? Where can Ontario residents look for an alternative mortgage solution?”
The alternative lending space is comprised of financial companies that work outside of the space dominated by traditional lenders like banks.
Some alternative lenders operate as private lenders, meaning they have access to a large amount of capital they wish to lend out. Some alternative lenders use a peer-to-peer model, where they connect people who need money with investors. Others are payday loan providers, which are very common.
Alternative lenders often charge a higher interest rate than the banks, since they are willing to take on more risk (such as with individuals like poor credit, etc). The fees and loan structures will vary among alternative lenders.
Why Should I Use an Alternative Lender?
Unfortunately, banks often are not concerned about your financial shortfalls. All too often, they would prefer dealing with one large corporation that needs millions of dollars in loans rather than take the time to assess, loan, track, and collect from hundreds of smaller entities for the same net amount.
In fact, even if the bank is willing to provide a loan, there are drawbacks. Loans from banks come with strings attached, there is a lot of paperwork to do, and it costs you one of the most valuable resources you have: your time. The delays in asking for and receiving a loan from a bank can be the difference between success and failure.
Thankfully, there are many reputable organizations specializing in alternative lending that you can trust to get you the money you need quickly and easily. They are there to connect you with the financing you require, and to capitalize on all the missed opportunities left by the banks. After all, who needs a traditional mortgage with traditional mortgage rates when there is a better solution available?
Alternative lenders (and alternative mortgage lenders) can be useful in many ways, but four specific reasons stand out.
1. Alternative Lenders Work Quickly
Although every alternative lender is different, some can even connect you with the money you need within 48 hours. The key to their speed and convenience is sometimes related to the partners they have, and sometimes it is due to their technology.
2. Alternative Lenders Have Great Rates
It’s true, it is common for alternative lenders to be unable to offer you an interest rate as low as a bank can, particularly if your credit history is slightly bruised.
That said, as long as you’re working with reputable alternative mortgage lenders you feel you can trust, the interest rates offered can still be very good, and the interest rates are certainly better than what you would pay on a credit card. The best interest rate is often offered to those who have collateral like a house or a car, which lowers the risk profile of the borrower in the eyes of the lender.
Everyone’s situation is different, so when you’re searching for an alternative lending solution, try to find one that can customize their rates based on your situation, and avoid those that offer a one-size-fits-all approach.
3. Alternative Lenders are Open and Transparent
You want to be able to trust your lender, whether they are a bank or not. A great way to develop a trusting relationship is be as transparent as possible with respect to fees and costs. If your lender can’t tell you exactly how much things will cost you prior to signing the paperwork, don’t work with them.
4. Alternative Lenders Are More Forgiving of Bad Credit
Good alternative lenders and mortgage brokers understand that in Canada, big banks are leaving an incredible opportunity on the table for them by being so risk-averse.
By refusing loans to small businesses and individuals, whether that borrower has a good or a less-than-stellar credit score, they end up leaving the door open for alternative lenders and borrowers to develop a win-win financing situation.
By finding ways to work with borrowers with bad credit, an alternative mortgage lender can make a small profit while the borrower gets access to financing that is otherwise unavailable. A company like Burke Financial offers many great financial solutions, including options for home equity loans, debt consolidation, refinancing and more.
What Information Does an Alternative Lender Require?
Unlike the process of obtaining a bank mortgage or bank loan, a good alternative lender or mortgage broker will make things simple for you. In fact, it’s one of the biggest advantages they have over the big banks.
A company likeBurke Financial offers you one of the most convenient application processes in Canada. To apply, all you need to do is provide three pieces of information:
Your name, email and phone number
The type of loan you’re looking for (e.g. home equity, debt consolidation, etc)
The loan amount
It’s really that easy to get the money you need.
Get Your Money Easily with Burke Financial
Burke Financial is one of Canada’s most popular online lenders for a reason: they’ve helped thousands of people reach their goals, make payments on their debt, or utilize the equity in their homes by connecting them with the right financing at the right time.
If you are an individual or a business that is tired of being rejected by banks, or if you need money right away without having to jump through bureaucratic hoops, then reach out to Burke Financial today and see what they can do for you.