In today’s economy, traditional banks and alternative lenders work together to meet the needs of businesses that may not qualify for conventional financing. Alternative lenders, such as invoice factoring companies, specialize in handling challenging, non-traditional, and often riskier deals. This helps businesses secure the funding they need while allowing banks to maintain strong relationships with their clients.
This partnership offers a seamless solution. The alternative lender manages the due diligence, including legal and underwriting . While the bank retains the client’s deposits and goodwill. For businesses, this collaboration ensures they don’t hear “no” from their bank. Instead, they are directed to a tailored financing solution like invoice factoring, asset based lending, or accounts receivable financing.
When Banks Refer Clients to Alternative Lenders
Here are common situations where banks turn to alternative lenders to help their clients:
- When Lending Requirements Aren’t Met
Businesses that don’t meet the bank’s strict lending requirements, such as minimum revenue or credit thresholds, can still access financing. Their banking partner introduces them to alternative lenders that factor invoices and provide working capital. - During Prolonged Financial Challenges
Companies facing financial difficulties and unable to meet lending covenants may require immediate capital to stabilize their o