Unlike previous times, 75-80% of the borrowers who seek residential and commercial loans from traditional banks nowadays are pushed away due to multiple issues such as bad credit and indifference towards certain businesses. Alternative lending is an excellent approach that helps both the loan brokers as well as their clients alike.
With reliable lenders like Titan Capital coming to the fore in Australia, brokers, investors and owners will have their finance requirements covered by the most experienced lenders in the industry. As alternative finance developed around 2008 due to the global financial crisis (GFC), it mainly aims at democratizing loan policies for everyone. When one looks forward to the post-COVID picture, it seems improbable that the banks would ease their strict lending policies.
The global economy is already hard-hit due to the lingering influence of the pandemic, and hence traditional lenders will continue to show their reluctance towards medium-level businesses. At this critical juncture, alternative finance becomes highly relevant.
All businesses need funding. Though some people rely on their savings, friends and relatives for the initial investment, at a certain point, one would have to rely on institutional capital for continuous growth.
However, banks cite several reasons, such as credit risks and impose strict regulations that challenge financing. Alternative finance, also known as peer to peer lending, has announced the arrival of non-banks that offer specific financial services like mortgage lending, commercial lending platform, equity release, etc., for investors and business owners with relative ease.
Peer to peer lending platforms have expanded their forte over time, outside the unsecured client to incorporate autos, student loans, and the latest types of speciality finance. They are generally not susceptible to market volatility, and hence one can secure loans at fixed interest rates. Most of them also maintain flexible Loan to Value policies to not exert any unnecessary pressure on the borrowers.
What are the Major Advantages?
It is needless to say that traditional banks take several months for loan approval and sanction. Established alternative financiers approve the loan within days, and faster settlement options (deliverable within a week) are available in case of any emergency. The rapid injection of funds is crucial in erecting a business in its initial phase.
Alternative financiers offer client-specific solutions rather than fitting a client into the already established loan mould. This is based on their understanding that no two clients would have the same loan requirement. Sensing the changing consciousness of the times, alternative financiers are more considerate towards brokers and their clients.
Hence, one does not need to be wary of endless scrutiny and the long faces they experience with traditional financiers. According to a survey recently conducted in Sydney, 30% of investors, business owners and homeowners are not aware of alternative lending options. For this reason, they are unable to experience the freedom that alternative finance brings along.
Lower Interest Rates
Statistics prove that the alternative lending industry shows a massive 18% growth every year, and commercial and residential lending accounts for 80% of the overall growth. Hence, it seems certain that the numbers will again go up as more alternative financiers enter the industry, to the advantage of business owners.
As of now, one of the hallmarks of the alternative finance sector is that they offer the most competitive rates available out there. With the entry of more lenders, the choices that entrepreneurs will have will certainly be broadened.