October 31, 2021

7 signs it’s time to leverage fintech alternative lending


It’s not always easy to ask for help. Pride and ego can get in the way, plus you just might not know where to look. In the business world, there are many avenues to which founders can turn to help scale their business. Alternative lending streams have sprung up left and right in the last few decades, so business owners aren’t lacking funding options anymore. But sometimes, the question isn’t so much where to get funding, but when. After all, what good is receiving funding after your business has gone under, or is too weak to salvage financially?

How to know it’s time to look at alternative lending

Scaling a business is as much of an art as it is a science, so unfortunately there is no silver bullet when it comes to the perfect time to scale. That being said, if your business has stagnated over the last year or so—and missed growth milestones along the way—it’s time to seek funding to scale. Although more established businesses can afford a slow year here and there, startups don’t have that luxury. While your company is stagnating, we’re willing to bet there’s another company out there creating the very product or service that put yours on the map in the first place. 

Let’s take a look at a few key clues that it’s time to turn to alternative lending streams. 

You’ve hit a wall in your growth

Most startups fail because they either fail to grow quickly enough, or they scale too quickly without the proper infrastructure to sustain their growth. While that might sound like a lose-lose situation, the point we’re trying to make is this: how you scale during the initial phase of your business can make or break it. That means figuring how you’re going to meet your business’ growth benchmarks while ensuring that your operations are able to handle the increased output. If you’ve been struggling with this over the past year with little to no improvement, it may be time to seek additional funding.

You lack credit history 

Many founders struggle with securing funding through banks and other traditional channels because their credit is poor, or they lack credit history. But as we all know, you can have a great business mind and struggle with personal finances at the same time. So why should that stop founders from growing their startup to its full potential? Unfortunately, it’s the way of the world as it currently stands. No credit, no bank loan, no funding. 

You haven’t broken into the VC “inner circle”

VC funding has the potential to completely change the trajectory of a business. If you’ve ever watched the HBO hit Silicon Valleyfootnote 1 you’ll know that founders will do practically anything to get a meeting with a Venture Capitalist firm. But unlike the TV show, in real life it’s incredibly difficult to get access to these funders. That’s because for the most part, these lenders operate in very small circles in which you have to know someone to “get in”. Not only that, but there can be significant bias in VC funding, including towards women and people of colour. 

Demand for your product continues to rise

Imagine that you’re a small business seeing demand for your product rise over a sustained period, but you run out of money and have to shut your doors as a result (not to mention disappoint a massive fan base). The following scenario, while heartbreaking, occurs time and again in the startup world—you knock off each milestone as they come, but then all of a sudden, you run out of money. This is the flip side to the first point we highlighted: you’re growing, but don’t have the funds to take you to where you want to be.

You’ve built a community of loyal customers

Every founder knows their business would be nothing if it weren’t for their customer base. Businesses spend countless hours building a community of loyal customers, many of whom end up becoming vocal brand ambassadors for the business across social media platforms like Pinterest and Quora. Just think about all the brands and products that have been brought back to life thanks to their loyal supporters footnote 2

The numbers are telling you you’re on the right path

Numbers never lie. If you aren’t sure whether you should be scaling or maintaining operations as is, take a look at your sales data. Are you meeting demand? Have you been profitable for at least six months? If you’re in a good place numbers-wise, that’s a tell-tale sign that it might be time to scale. Unlike banks that focus on credit or VC firms that depend on a single pitch, many alternative lenders look at the whole picture. If you’re wondering whether you might qualify for funding, Clearco’s funding calculator assesses how much your business could be eligible for. 

You’re turning down opportunities for growth

Missed opportunities are a shame, but they’re especially painful when they are preventable. Founders often find themselves in a situation in which they have to choose between putting funding towards operations or towards growth. But why not both? Securing additional funding means you can say “yes” to growth opportunities that come your way, without sacrificing on any other arm of your business. 

How fintech alternative lending can help

Fintech—or financial technology—refers to innovation that bridges the gap between commerce and technology. It helps businesses manage financial operations, streamlining processes through use of intelligent algorithms. 

Fintech alternative lending, unlike traditional platforms, takes the guesswork out of funding decisions by leveraging machine learning, AI, and predictive analytics. Today, it is used across many industries, including by many online alternative lenders. This removes the bias that plagues many traditional forms of funding, and puts your business’ potential for success above everything else. One such provider of fintech alternative funding is Clearco.

Clearco offers funding to founders looking to scale, no matter your credit history or ability to pitch to high-net individuals. We use data-driven decision-making to fuel businesses looking to scale to the next level. 

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