What exactly is direct lending?

Literally translated, it means a direct loan. As the name suggests, direct lenders are parties that provide loans without bank intervention. A direct lender is also better known as an “online lender”. This sector was therefore created after the financial crisis in 2008, and banks became stricter when it came to issuing loans. Direct lenders jumped into the gap that has arisen there.

It does not mean that a direct lending party does not take a critical look at the financiability of a company. They are certainly critical. However, the focus is much more on today's situation and a company's growth opportunities.

Direct lenders use different guidelines

You used to go to the bank to borrow money. But that is different these days, because banks have become much stricter. Research shows that as many as three quarters of the applications are rejected.

Direct lenders opt for different guidelines. In addition to the fact that these parties use a less stringent assessment, they also look at what is possible. You will receive a proposal that suits your situation instead of just a harsh rejection.

Benefits of direct lending

For growing entrepreneurs, direct lending is an interesting financing option to further investigate. Below, we have listed the 4 main benefits of these online lenders for you.

Benefit 1: receive your funding within a few days

Entrepreneurs are already busy enough. They don't have time to gather stacks of paperwork for a funding application. Direct lenders make it as easy as possible for the entrepreneur. The application process is entirely online and limited documentation is required when applying.

After applying for your funding, the wait won't take long. You will often receive an appropriate proposal within a day. This is based on your application and an initial credit check. Does everything look good and has the application been fully approved? Then you will receive the funding quickly.

Benefit 2: stay the boss of your own company

Attracting an investor to enable healthy growth? That can be interesting, but it has a consequence for you as an entrepreneur. The advantage of an investor is that he or she brings knowledge and experience with him. This can strengthen the growth of your company. The disadvantage is that an investor buys stocks. As a result, you no longer have full control over your own company. The investor becomes co-owner and shares in the company's profits.

We can imagine you're not waiting to share ownership and profits. You can take the same growth steps when you finance through a direct lender. But you always retain full control over your own company.

Benefit 3: financing tailored to your growth

Entrepreneurs are mainly concerned with managing growth and keeping the company running. It is then nice if a financier thinks along with you to tailor the financing to your growth.

Direct lenders look at the financing needs based on current company data. You don't have to provide historical business data. An online lender also does not ask for a future forecast. We look at the current status of the company and the trend in the market.

Based on the collected data, it is determined whether your financing request is realistic. The goal of a direct lender is to be able to offer financing to every entrepreneur. It is possible that the funding application does not fit the current situation. An online lender then always looks at what is possible.

Benefit 4: flexible repayment options

Then the time has come for the funding to be completed. You can start investing. But those who finance must also pay off. Direct lenders have various flexible repayment options.

You can choose to pay a fixed amount daily or monthly. If your turnover fluctuates or if you have a seasonal business, it can be interesting to pay off based on your turnover. You agree in advance on a percentage of what you will repay. The more turnover you make, the more you repay. So when your turnover falls, you are not left with a high repayment.

Direct lending for the growing entrepreneur

Swishfund is one of the first and largest direct lenders in the Netherlands. In 5 years, we have already financed more than 140 million euros to more than 3500 entrepreneurs. Do you want to finance your growth? Simply make a request via our website. We'll call you within 24 hours with an informal proposal.

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