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Bank Loan vs. Private Business Loan: What’s the Best Option in Boston?

Neon sign at a private loan agency in Boston, MA

Whether you’re a seasoned business owner in a cash crunch or an aspiring entrepreneur looking for working capital, getting a business loan is a viable option to fulfill your needs.

While bank loans offer safety and low-interest rates, not every business can qualify for them. And even if you do, it’s a time-consuming and complex process. In areas where banks won’t grant you a loan, you can turn to private lenders. Private business loans have fewer prerequisites, flexible repayment options, and offer quick funding. To help you decide, our loan agents in Boston will break down the major differences between bank and private business loans.

Bank Loans vs. Private Loans—Overview

Banks are typically regulated by the government and have rigorous borrowing conditions, making it difficult for you to qualify for them. They want clean and straightforward history and multiple verifications. Complicated personal/business credit history or lack of trading experience can result in loan rejections. Moreover, banks also take longer to approve and offer a loan and require multiple in-person visits. Private loans are less regulated and have faster and easier approval processes.

One advantage of opting for bank loans is lower interest rates. Banks have easy access to depositors’ cash and federal funds, allowing them to lend out loans at lower rates. Private money lenders get funds from investors, banks, or other financial institutes. Investors and institutions lend money to get a decent return—therefore, you have to pay a higher interest rate on your private loan.

Why are Private Lenders Preferred Over Banks?

If private lenders ask for higher interest, why do people prefer them over bank loans? It all comes down to eligibility requirements and time constraints. Businesses need quick cash to fund their projects and start earning revenue. Often, by the time businesses get a loan from the bank, the window of opportunity has passed.

In addition, small businesses and startups don’t always have strong credit scores and are less experienced, reducing their chances of securing a bank loan. Private lenders assess applicants less rigorously, allowing you to complete the entire process online and offering funding within a few days.

If you want the flexibility of repayments, ease of online lending, and quick access to required funds, you should opt for small business loans at Whitestone Fund. We specialize in providing working capital and lending solutions to businesses in Boston, MA. You can also get merchant cash advances from our firm. Get in touch with our business loan agent in Boston, MA now.  

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