FIRST QUARTER 2019 19 continued on page 20 continued from page 18 Getting to yes has been made tougher by the continuing merger of financial institutions, leaving borrowers with fewer choices. “Bigger banks have been swallowing community banks and gravitating toward the business of making larger loans,” states a recent story in The Wall Street Journal. The problem’s worse if you are in one of a growing number of small towns and rural communities where banks are closing profit-challenged branches. Shut out of the money market, you might turn next to a loan sponsored by the Small Business Administration. But those can be just as elusive. “An SBA loan is not a slam dunk,” said Denise Beeson, a business consultant based in Santa Rosa, California. (denisebeeson.com). She points out that the lenders involved in such arrangements look just as closely at an applicant’s credit and financial records. ENTER THE NONBANKS So what to do? One fairly new resource is an array of alternative, nonbank lenders. These online operations include such entities as Lending Club, Prosper, Funding Circle, Kabbage, OnDeck Capital, Headway Capital, BlueVine, StreetShares, Fundera, Lendio, Noble Funding, and PayPal Loans. (Not all platforms are legal in all states.) An additional group of nonbank lenders caters primarily to consumers, but also represents potential money sources for small business owners. In this group are Upstart and Peerform as well as residential mortgage lenders Quicken Loans and The Money Store. “While you could borrow from consumer-oriented lending platforms, you are likely to get less money,” said Barbara Vrancik, a small business financial consultant based in New York City (BarbaraVrancik.com). “They often just look at your credit score and income when reaching a loan decision. In contrast, business lenders may take into consideration your total business revenues and the number of years you have been in business.” Some alternative lenders operate as Peer-to-Peer (P2P) platforms, web-based intermediaries matching borrowers with pools of relatively small investors. Others act more like brokers, matching loan applicants with a curated group of larger direct lenders. Whatever their internal dynamics, such organizations can toss lifelines when the need for money butts up against a conservative lending environment. And that lifeline can be especially welcome when a business has an urgent expense. “Nonbank lenders can usually make loan decisions more quickly than commercial banks,” said Marilyn J. Holt, a Seattle- based consultant and author. Some loans can be granted in 24 hours, while others might take only a week or a month—far speedier than the typical waiting period of up to 90 days required by traditional banks. “One reason is that private lenders often do not need to conform to the same federal and state regulations as commercial lenders.” Nonbank platforms have a number of other advantages. “Alternative lenders are often willing to take more risk in return for higher interest rates,” said Jennifer Rusz, CEO of Sterling Rose Consulting Corp, Lawrenceville, Georgia (sterlingroseconsultingcorp.com). Commercial banks often want to see steady profits over the course of a 12- month period, while nonbank lenders are often more flexible—a special consideration for seasonal businesses. Alternative lenders also often welcome certain COVER FOCUS