As the months go by, there are many things in the business world that continue to change or evolve. However, one constant over the last two years is that small business loans from traditional lenders like banks and similar finance companies remain extremely hard to come by.

Banks and other financial institutions remain wildly skeptical about what tomorrow will bring. Some banks cite government regulation, while others say they simply don’t see qualified borrowers.

Regardless of the reasons, small businesses continue to struggle to find business loans from traditional sources to help them grow and succeed.

This has created a huge funding gap for small or major businesses in this country.

Small businesses are one of (if not the) strongest economic engine in our nation. Small and high street businesses provide jobs, wealth and opportunity in the communities in which they operate, communities that come and go with the strengths and perspectives of their local businesses.

However, from the banks’ side, they also create the biggest risks, risks that banks do NOT want to take.

The old saying: the greater the risk, the greater the reward. And to achieve that reward, we have to find ways to make risk work in this new economy. And some new non-bank lenders are finding ways!

Let the ingenuity of this country’s entrepreneurs come up with new temporary business loan products and services, all designed with the small business or major business in mind.

Many new non-bank lenders are stepping up to fill the small business financing gap left open by banks. These business loan products are often easier to qualify for and can be financed much faster than traditional loans, because these new finance companies understand the real needs of small businesses and the opportunities they represent.

Some of these new lenders have been changing or modifying traditional business loan products to meet this new demand for small business financing. Example:

There have been significant changes and growth in nonprofit lenders like Micro Lenders, where a new business can qualify for a loan of up to $35,000, but now also where an existing business can receive a business loan of more than $50,000, all designed and marketed specifically for small businesses.

There has also been a sharp increase in peer-to-peer or social media lending. While these are still designated as personal loans (most business loans for new businesses are personal loans, guaranteed by the business owner), they offer (and are now also marketed to) small businesses as a quick and generally low-cost means of cost to obtain a small loan. to help them get through a slow month, meet payroll obligations, or take advantage of new opportunities to grow the business.

There have also been new classes of commercial lenders entering the market. Some have taken traditional lending vehicles like accounts receivable factoring or business cash advances and modified them to better meet the needs of smaller businesses (businesses with potential but not yet profitable), while others They have created a whole new way of looking at the financial strength of a business with a focus more on cash flow than profitability or time in business.

To reduce the risk of non-compliance; Most lenders, bank and non-bank, like to finance on the basis of asset conversion. This allows these lenders to focus less on the overall financial condition of the borrower and more on the strength and composition of the asset used as collateral. Therefore, when the assets actually become cash (such as a customer paying their bill), those funds are used to pay off or pay off the outstanding balance of the loan. In the past, this has allowed businesses and their owners a means of financing that they otherwise would not have obtained due to time in business or years of profitability constraints.

However, this new generation of lenders is embracing this vision of business financing, adding their own individual touch and finding success in financing growing and for-profit small businesses.

For example, there are new non-bank lenders that focus less on profitability and credit, but more on the ability of the business to generate cash flow every day. If your business can close deals and has a steady supply of cash inflows (regardless of whether the business is profitable or not), then these new lenders are willing to take a chance on your business’s ability to grow, with your financial help. This also means that these lenders will match your payments with the daily cash inflows of your business.

The benefit to lenders is a lower risk of not having to wait 30 days or more only to find out that a business can’t make a payment. The benefits to the business are being able to use intangible assets (such as your ability to find and serve customers) to obtain the financing needed to take the business to the next level.

In addition, there are new business financers that are bypassing business loans altogether, and innovative new business financing mechanisms.

For example, playing with the peer-to-peer lending industry, there are companies that are implementing peer-to-peer private or angel investment. Therefore, if your business does not meet the very strict and specific criteria of angel capital or private equity deals, your business could still get the same type and amount of investment dollars from others like you or those in your community. or in your network.

The bottom line here is that the longer banks keep their vaults closed against small businesses and continue to ignore the growing demands for small business financing, the opportunities created for new and innovative lenders to step up and fill these gaps. they are amazing.

Will these new lending vehicles and methodologies work for your business? It really depends on your business and your ability to look outside of the box. Will all these new lenders survive? Probably not. But whenever there is unmet demand, pioneering entrepreneurs will emerge hoping to change the world while fulfilling their personal dreams.

What this means for small businesses struggling today and for those that will surface tomorrow is that as banks continue to struggle and avoid internal innovation to meet today’s demand for small business loans; other nonbank lenders are stepping up and trying to succeed with new products and new markets.

So while finding and obtaining a bank loan is likely to remain the goal of most small businesses (since most don’t know about or understand these new options), new financing vehicles are opening up every day from lenders. non-banks who really understand the needs of growing businesses and are devising ways to meet their business capital/lending needs.