4 Ways Canadians Can Qualify For Alternative Financing Options
Alternative financing options are gaining popularity in Canada. Thanks to tech-savvy millennials who desire financial products that are quick and flexible, alternative lending structures now serve as alternatives to banks and traditional lending firms. In fact, a 2018 consumer report shows increasing preference among Canadians for online lenders than traditional banks and credit unions. These other options are gaining acceptance as Canadians become aware of its benefits and convenience.
This growing preference comes as a response to credit restrictions that restrict access to the needed funding. This means that traditional banks tend to reject loans rather than provide assistance, leaving Canadians looking elsewhere to help them with their needs. Such a scenario compels most Canadians to look for other funding sources for immediate personal needs and additional business capital.
However, just like the common financial services, most alternative financing options like payday loans and various cash advances also come with some qualifications.
To help you out, here are four ways Canadians can qualify for alternative financing options.
Common Qualifications For Alternative Financing Options
Typically, Canadians can borrow for alternative financing options, like payday loans, much easier than loan applications forwarded to banks and other financial institutions.
If you’re considering these alternative loans and other financial services, here are common qualifications you should keep in mind:
To be eligible for a loan, lenders will require you to be of legal age. In Canada, the legal age would be 18 years old.
To verify this information, you may be asked to submit some identification cards or even a birth certificate to prove your legal age. Once you submit this information, your loan will be processed as fast as possible.
Active Checking Account
Since most alternative financing options can be processed online, you need an active checking account to ensure you receive the loan proceeds in the fastest time possible. With this checking account, the lender will deposit the money as soon as your loan is approved. Without it, having access to the loan proceeds will be more difficult.
Other Qualifications For Alternative Financing Options
While lenders generally require age and personal details as mandatory requirements, they also look into unique personal and business circumstances as well as proof of income to determine loan capabilities. Typically, most lenders will check your income to know if you’re eligible to take alternative financing options and if you’re able to repay your loan back in no time.
Thus, if Canadians want to increase their chances of becoming more eligible for alternative financing options, they may consider the following:
Have Non-Traditional Sources of Income
Renting out rooms via Airbnb, driving for Uber, dog-watching services, and many more are sources of non-traditional incomes. While not necessarily considered a regular wage, gig workers support themselves by working several jobs with pay equivalent to a regular paycheck.
Luckily, alternative lending turns this into an opportunity by providing non-salaried workers with ways to finance their homes. By considering freelance work as another source of income rather than a single source, lenders are confident that gig workers can help pay their loans from various sources.
So, if you have some non-traditional sources of income, lenders may not hesitate to offer you great alternative financing options.
Own A Small Business
Generally, businesses may not meet stringent requirements from banks and may have difficulty securing additional capital. Also, some businesses may have a lot of deductions and taxable incomes that fall below traditional loan standards.
However, if you consider some alternative financing options from non-traditional lenders, simply owning a small business may help you qualify for a cash advance, term loans, equipment financing, or opening business lines of credit. They cater to business owners that are at least three months in operation and satisfy minimum annual gross sales. There’s even an option for women-led companies to qualify for business grants.
This means that as long as you have a business, your lender may consider it as a good criterion to qualify for alternative financing options. Given the income you get from the sales of your business, your lender will be aware of your ability to repay the money you’re going to borrow from them.
Realistically speaking, salary, employment history, and credit score are often the main factors that traditional banks consider to provide Canadians’ loans. Unfortunately, the majority of them fail to pass these requirements. These factors compel them to find alternatives that cater to their personal and business financial needs.
Thankfully, by considering the information mentioned above, you’re able to increase your chances of availing some alternative financing options without any problems.