If you are stepping into the world of Alternative Online Lending for the first time, then all the information on the blogosphere can be quite confusing. Every company is advertising different types of offers or services, AND it's all couched in marketing-laced language that obscures the actual information. Therefore, to provide some clarity, here is a list of some must-know alternative lending terms here:–
1. APR (Annual Percentage Rate)
This is the most useful metric to compare different funding offers! Simply put, an APR is a calculation of how much a financing offer will cost you on a yearly rate. It includes all fees and costs and is followed by most alternative financing companies like Cresthill Capital.
2. Debt Service Coverage Ratio (DSCR)
A DSCR is the preferred criterion for online alternative lenders for evaluating a client’s creditworthiness. Debt Service Coverage Ratio (DSCR) is basically your total annual income divided by any current annual liabilities. If a DSCR is greater than 1, it means that you or your business is able to pay off its current financial obligations.
3. Merchant Cash Advance (MCA)
This is one of the most preferable financing options for small business owners. In an MCA, the money you receive from online lenders like Cresthill Capital is seen as an advance payment on your future earnings. The repayment is also made as a percentage of each sale made with a debit or credit card.
4. Line of Credit
This is another type of alternative lending option popular with SMEs. A line of credit (LoC) operates like a credit card with a limit that businesses can use as a steady stream of money. They withdraw and use what they need and only pay charges on the amount they use till it is repaid. As per some recent Cresthill Capital Reviews, this is one of the best finance options for those dealing in small and medium scale seasonal businesses.
5. ISO (Independent Sales Organization)
If you are looking for funds, then you will certainly encounter an ISO. ISO or an Independent Sales Organization is a third party company that works with small business owners by providing liaisoning merchant services. They act as the link between businesses looking for credit and Alt-fin organizations.
6. Invoice Financing
This is a great option for businesses, which are struggling with cash flow due to unpaid invoices. With invoice financing, you get a line of credit by pledging your unpaid invoices as collateral. A lending company like Cresthill Capital Reviews all the invoices closely as the size of the line of credit depends entirely on the value of your outstanding invoices. You are ultimately responsible for collecting the money from the companies who owe you, but through invoice financing, you now have the cash to meet your immediate obligations.
These are just a few of the terms that help in demystifying the world of alternative lending for you. Of course, there is more to know. For that, you may contact a trusted alt-fin expert or just simply get in touch with Crest Hill Capital at 800-828-0452 before you apply for your first financing offer.