Niche businesses are often faced with cash flow issues because of the fact that they appeal to such a specific subset of people. That’s why many traditional lenders will either try to avoid working with these types of businesses or don’t offer the most favorable terms. But there are still many options out there for niche business owners. As a matter of fact, some lenders specifically cater to them. Let’s take a look at how you can find a good lender for your new niche business.
1. Consider Non-Bank Alternatives
While some people may automatically believe that going the traditional way is the best when seeking a small business loan, you should consider going with alternative non-bank lending instead. Whereas you’d have to deal with a long application process with a bank and have to wait and wait for a response, the process is much easier with most alternative lenders.
Most will allow you to submit your application online, which can be done in as little as 15 minutes in some cases. And you’ll be approved as fast as 24 hours after submitting an application. Good luck getting that kind of service from a bank.
2. Look at Loan Matching Services
Another great option would be to work with loan matching services. Services like Lending Express, for instance, will look at your credit situation, build a profile for your business, and present you with the best loan options for you. They use a complex algorithm to match you with lenders that will not only offer the best terms depending on your profile but with higher chances of acceptance as well. Going with this type of service will allow you to scout multiple lenders at once and get a much better deal.
3. Private Lenders
Another alternative would be to look at private lenders, like an angel investor or venture capitalist. However, you’ll have to be ready to relinquish some of your equity and decision power. But this is not necessarily a bad thing.
For instance, you could find a lender who has experience in your specific niche and knows exactly what you actually need. They might tell you that you need to borrow much more or less or advise against making certain buying decisions. You’ll also be able to access the funds much faster than with a bank in most cases.
However, there is one major disadvantage with private loans, and that is the cost. Private lenders usually get their funds from a bank, so they’ll have to charge you a higher rate to make up for it. But in some cases, that is the only choice available to small startups, so that’s a price you’ll have to be ready to pay.
Finding funding for a small niche startup can be a challenge, but one that you can overcome if you work with the right people. Broaden your options, and don’t be afraid to go the non-traditional route if you want to increase your chances of getting financing.