One of the most common questions we’re asked by small and mid-sized business owners is to explain the differences between traditional business funding options (e.g. banks and credit unions) and alternative business funding from sources like Mulligan Funding. And while we’re happy to answer every question posed to us, we must admit that this is among our favorites – because the differences between the two options are vast and usually eye-opening.
The simplest way to highlight the advantages of alternative business funding is to compare key five elements: application, approval, collateral, control and repayment.
Traditional business lenders often have an elaborate application process that involves multiple documents, including: business plans, personal and business credit scores, at least two years of financial statements, tax returns, and even a comprehensive and updated resume. As can be imagined, collecting, updating, submitting and often re-submitting these documents (because they may not be deemed complete or correct) is time consuming, and can be costly as well.
Alternative business funding sources like Mulligan Funding, dramatically streamline the application process by using a 1-page application that can be filled out online at anytime (e.g. business owners can do it when they aren’t running their business, which is usually very early in the morning or late in the evening). What’s more, only a small number of simple supporting documents are required, such as a few months of business bank statements, and a cost-benefit analysis to get a sense of monthly average cash flow.
Traditional lenders can often times take months to evaluate a loan, and it’s not uncommon for more than a dozen different people to assess a single application (or at least have it on their desk!) at one point or another during the process. Furthermore, applicants must have near-flawless – or in some cases, completely flawless — business and personal credit scores, and at least two years of business financial statements. Otherwise, their application is almost certain to be rejected.
Alternative funding partners such as Mulligan Funding take a completely different approach to their business funding process. Loan applications are assessed within 24 business hours. Furthermore, applicants with imperfect or bad credit scores – personal, business or both – can still apply. And upon approval, funds are deposited into the applicants account the next business day.
Traditional business lenders demand that business financial loans are backed by collateral, such as equipment, properties, vehicles, etc. Without enough collateral, the loan won’t be approved in the first place.
Alternative funding providers don’t require collateral to be assigned to the loan. This helps strengthen a business’s balance sheet. It also gives business owners the freedom to liquidate an asset (e.g. equipment, vehicles, etc.) if they find it profitable, desirable or necessary to do so. You can use the proceeds of alternative business funding any way you choose.
Traditional business lenders typically impose strict restrictions on how business owners can use the loan. For example, if the application noted that the business financing would be used to purchasing inventory, then that’s how the money must be spent. It doesn’t matter if the business owner might have a more important or profitable use for the funds. There is no flexibility.
Our alternative business funding approach allows you to decide how a business should spend its working capital! That’s why there are no restrictions or conditions of any kind on how the money can be spent. This is particularly valuable if a golden opportunity arises, such as the chance to reel in a huge customer, or win a lucrative project bid.
Believe it or not, but traditional business lenders don’t want loans to be repaid early. This is because their profit is based on collecting at least 100% of the anticipated interest (it can be higher than 100% if there are any repayment missteps).
Once again, alternative funding sources like Mulligan, take a different approach. While prepayment is optional (i.e. there’s no requirement or even request), business owners who find themselves in a position to pay back their loan earlier than scheduled can do so, and reduce their interest costs.
Alternative lenders offer advantages that traditional business lenders can’t, so make sure to consider all your options before commiting yourself and your business.
Call Mulligan Funding at 855-326-3564 to discuss your financing options today!
*The information shared is intended to be used for informational purposes only and you should independently research and verify.
Note: Prior to January 22, 2020, Mulligan Funding operated solely as a direct lender, originating all of its own loans and Merchant Cash Advance contracts. From that date onwards, the majority of funding offered by Mulligan Funding will be by Loans originated by FinWise Bank, a Utah-chartered Bank, pursuant to a Loan Program conducted jointly by Mulligan Funding and FinWise Bank.