Fintech working capital loans often take it on the chin for their higher cost of capital.
And while it's true that these loans, in exchange for speed and ease of process, often do have higher price tags than their traditional bank counterparts, that is not always the case.
With unsecured term loans and lines starting at 7.99%, the interest rate range in this space is vast, so don't assume that your bank will automatically be the better choice.
For cash based businesses like salons, bodegas, restaurants, and others, getting single or low double digit rate execution on a line of credit that can fund in 48 hours is an incredibly powerful tool to have at the ready.
Similarly, if you don't have "near-bank" qualification chops, you can still get the capital you need to grow your business. Indeed, capital that would otherwise not be available.
Now, the rate will be slightly higher and the term a little shorter, but you can still get funding. And I would submit that getting the funds your business needs - albeit at a higher cost, is much better than not getting any funds at all.
At a minimum, it gives the business owner an additional option. The more options you have, the more empowered you are to make critical decisions.
The key to finding the best terms and the best lenders is to utilize a commercial broker who is solely dedicated to being an advocate for you and your business. An experienced broker will secure offers from the most competitive banks and lenders in the marketplace, sift though them with you, and guide you into the best programs for your business.
Lastly, I should note that, although it seems counterintuitive, there are times where we advise our clients to walk away from an approval if the payments and / or total cost of the new loan would be prohibitive.
Sometimes the best move is to simply stay put.