Changes in customer behavior, maintaining an efficient supply chain and enduring through lockdowns and government restrictions are only a few of the challenges that business owners have to deal with to financially thrive. The Canadian Federation of Independent Businesses has reported that nearly 239,000 businesses are at risk of permanently closing due to the impacts of Covid-19. Now the question is, who can help business owners with their financial problems?
While banks offer various financial services and better rates, they might not be the best possible solution, especially for small and independent businesses. Whether a mortgage is needed to increase cash flow, raise funds to scale or just to weather the financial challenges, a bank’s services might become a burdensome process without the final result that was intended. Not to mention the tightened approval criteria that have been implemented after the pandemic started. Depending on the specific situation, there are alternative lenders that typically have easier approval criteria, sufficient mortgage amounts and lenient income approaches. They are also known as B-lenders.
What Do Alternative Lenders Do?
Business owners should explore all the venues available to them to attain a mortgage. From banks to private lenders. Alternative lenders are considered regulated entities that stand somewhere between the banks and private lenders. Depending on the scenario, they could be offering better terms and a more lenient approach to income qualification.
What To Consider Before Your Mortgage Search
Before you dive into contacting different institutions to access a lender, keep in mind that one type of lender could be the best for one situation and the worst for another. You need to have a clear understanding of what each lender provides and what their terms and conditions are. Is the bank the best option for you? Are monoline lenders providing more flexibility? Is a B-lender the only option for the amount you are looking for?
The great news is, you don’t have to do all the research. A broker has already done it for you.
If you are interested in knowing more about what alternative lenders can do for you and your business, contact a broker. Getting in touch with a broker allows you to explore all of the options available to you, including banks and B-lenders, monoline lenders and even private lenders. Consulting with a broker will give you an understanding of your needs to either get approved for a mortgage or define a road map to achieve your goal. They are not limited to what each lender offers and will find the best fit for your situation.
Whether you are looking for a residential or commercial mortgage or general advice on what to pursue for your financial needs, a broker can guide you through your options. As part of their service, brokers usually provide clients or prospects with a consultation without any obligation to commit. Just a casual conversation to discover your options and eligibility for different mortgages. If you are getting in touch with an expert broker, they can also help avoid shopping around for lower rates or flexible terms on your own, as they would have done much of the research for you.
What To Consider About Eligibility Factors
While some traditional financing institutions such as banks have been tightening their eligibility criteria, alternative lenders are typically open to challenges.
• Low credit score: If a business has had a previous bankruptcy or damaged credit score, there is a narrow chance of approval with banks. However, B-lenders can be more likely to accept and work with these terms.
• Unprovable income: Banks will typically require you to prove your income with documentation of Notices of Assessment, and T1 forms from the past two years. This is when alternative lenders would consider contracts, commissions, freelance work and even tips as proof of income, as long as it is stated in either business or personal bank statements. This, in itself, is a huge advantage for freelancers or self-employed individuals, who have difficulties proving their income.
• Stress test: While the stress test is a barrier for many to get approved by the bank, some of the alternative lenders don’t use the stress test as a main benchmark to qualify a case.
It is critical for business owners to understand their needs and seek the right help. Get in touch with professionals and let their expertise and wide network take some of the burdens off your shoulders.
GreenFlow Financial is an award-winning mortgage brokerage firm based in Toronto and Ottawa.
Brokerage Lic. #: 12402
1200 Bay Street, Suite 202
25 Sheppard Ave W, Suite 300
1 (800) 712-8520 X 100