The best way to understand an alternative business-funding model is by comparing the five key elements: application, approval, collateral, control, and repayment.
Many business owners would like to know how ArkCare Financial differs from traditional business funding options e.g. banks and credit unions. We are happy to answer every question posed to us, but we must admit that this is one of our favorites.
The best way to understand an alternative business-funding model is by comparing the five key elements: application, approval, collateral, control, and repayment.
The application
It is typical for traditional business lenders to require multiple documents, including business plans, personal credit scores, two years of financial statements, tax returns, and even an updated resume. These documents can oftentimes be time-consuming and costly to collect, update, submit, and often resubmit because they may not be complete or accurate.
The application process for alternative business funding sources like ArkCare Financial is streamlined by using a seamless application that can be completed online at any time. For example business owners can complete it when they are not running their businesses, which is usually early in the morning or late at night. Some of the processes and documents required may be similar to those of traditional lenders. However, only a few simple documents are typically required. These documents include a few months’ worth of business bank statements, as well as a cost-benefit analysis to determine monthly cash flow.
The approval
Some traditional lenders may take months to evaluate a loan, and it is typical for multiple people to assess a single application or at least have it on their desk at one point or another during the process. Additionally, applicants’ business and personal credit scores may become a factor to approve loans. Financial statements for at least two years are usually required.
Alternative funding partners such as ArkCare Financial take a different approach to business review. We assess loan applications within a few hours. After the approval of the funds, the applicant’s account is credited a day later.
The collateral
It is common practice for traditional business lenders to require collateral to secure business loans, such as equipment, properties, vehicles, etc. Some alternative funding providers that do not require you to submit a collateral assignment. In this way, a business will be able to strengthen its balance sheet in the future. Furthermore, it gives business owners the freedom to liquidate assets e.g. equipment, vehicles, etc. if they deem them profitable, desirable, or necessary. If you receive alternative business funding, you can use the proceed as you see fit.
The control system
There may be restrictions placed on the use of traditional business loans by traditional lenders. If the application states that the business financing is for inventory purchases, then the money has to be to purchase inventory for the business. It may or may not be possible for the owner to use the funds in accordance with these specifications, depending on the owner’s unique needs.
The repayment process
Some traditional business lenders prefer borrowers to repay loans according to their repayment schedule rather than paying them off early. The reason for this is that their profit margin depends on them collecting at least 100% of the anticipated interest.
ArkCare Financial, as an alternative funding source, takes a different approach. It is not mandatory to prepay – there is no request or requirement for prepayment – but business owners who are in a position to do so can do so, reducing their interest costs.
In summary
Consider all your options before committing yourself and your business to an alternative lender. Alternative lenders offer advantages that traditional business lenders cannot.
Call ArkCare Financial at 201-890-7472 to discuss your financing options today!
The information shared here is intended to be used by you only for informational purposes only and you should independently research and verify.