Earlier this month, New Business Funders entered the alternative business lending space, launching a solution to help startups access financing when they can't get a bank loan. The news raised some eyebrows, especially as the largely unregulated market of marketplace lending took a hit thanks to the sudden exit of Lending Club's CEO, casting widespread doubts over the vitality of alternative lending.
But it looks as though another market entrant is similarly dismissing fears over the success of alternative lending.
An announcement on Friday (May 20) revealed First American Merchant Funding (FAM) is the newest player in the world of alternative lending, and the firm said it focuses on providing financing for businesses deemed "high risk."
Representatives at the firm said their approval rates are "some of the best" in the industry.
"We approve merchants that find it hard to get approved elsewhere," the company said in a statement. "Business is changing, and we're thinking of new and interesting ways in which we can help put you at the forefront of that change."
The company highlighted the need for quick financing at any time or day of the week. It added that traditional lenders tend to put significant weight on credit scores, causing them to veer away from newer, less-established businesses.
FAM provides merchant cash advances to businesses and entrepreneurs. A lump sum is provided to the borrower, which is then paid back — plus interest — through a percentage of debit and credit card sales made by the business.
"This form of business funding is becoming more and more popular due to the flexibility it provides," FAM stated. "During slow months, a business pays back less. During good, busy months, the business pays back more."