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ALTERNATIVE LENDING: IS IT THE FUTURE?

Noticed a difference in how easy it is to secure credit through alternative lending in Australia in the past few years? SMEs struggle to secure funds from major banks that continuously tighten the credit regulations. It is a renowned B2B solution to help businesses help their clients.

There are two popular kinds of finance that such lenders provide.

1. Residential

2. Commercial

The former is for mortgages and house loans when planning to buy a new property or home. While the latter is for business needs to meet the demands of owners and investors.

Consider this, for instance. Brokers desire to secure the best deals for their clients when they are planning to buy a house. Through the medium of alternative lending, it is now possible for them to do so. The LVR is also desirable as it is upwards of 65%. A Loan-to-Value ratio of over 60% is considered highly profitable.

Alternative lending is another way that leads to financial freedom apart from traditional banks. They offer some of the lowest interest rates, making them attractive to brokers.

Cons of Traditional Lending:

As traditional lenders focus on lower-risk, only large firms are able to meet the benchmark to ensure profitability. Currently, Australian SMEs face a funding gap of over 70$ billion. If businesses with only 100$ million turnovers get funding, what are the others to do? Banks also require considerable collateral in the form of property assets and so on.

The whole process of applying for the loan and finally getting the money is unnecessarily cumbersome. Quick and unsecured finance is the need of the hour. The economy will be subject to significant underperformance if there is not enough funding for SMEs.

Innovative Lending Strategies:

Alternative Lending creates unique opportunities for investors, brokers, and financial institutions. There are lesser bumps along the road in the process.

Benefits for mortgages:

  • It is easier and quicker to secure the funds. The criteria are much simpler to fulfil, and almost no red tape to go through.
  • The credit limits are flexible. The lenders offer convenient terms and focus on each client’s needs.
  • They can give fixed interest rates. The market conditions will not affect these.
  • The procedure is easier and quicker. There is no intimidating mountain of paperwork to deal with during the process.
  • It is possible to get the best rates. Efficient brokers submit the loan application to a lender who can find the best rate for a mortgage.
  • It is a reliable alternative option. When banks or other lenders deny loans, alternative lending helps secure loans.
  • They have a vast knowledge of the market and can give targeted help based on it.

Lending specialists use technology to benefit them and establish secure relationships with their clients. They address their needs and create bespoke solutions for them. The demands differ and change over time. So, lending solutions also need to be appropriate to suit such conditions.

Cookie-cutter rates do not usually exist in alternative lending platforms. It is versatile and more agile than one would assume. The products and rates are meant to suit each client. They are equipped to deal and offer credit in less than 48 hours in most cases.

Alternative Lending is not only for when things are not going well as most people misunderstand. It is an opportunity to assist businesses to help meet their clients’ needs on time instead of a bank that demands requirements that are difficult to fulfil.

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