Technology is the biggest trend influencing every industry today. In the world of financing, financial technology or fintech is among the biggest evidence of this generation’s technological revolution. Financial technology is beginning to revolutionize the financial industry, the same as the impact of the Internet in almost every industry. Need Money Now is just among the Financial Technology made available to small businesses.
What is FinTech?
FinTech (Financial technology) generally refers to any business that uses contemporary software and technological know-how to apply its groundbreaking work to financial services. Contrary to general knowledge, financial technology has been in development for 65 years, leading to the continued success of the industry in financial technology. Following the establishment of credit cards in the 50s, the industry began to hold a genuine part in the financial industry, and since then, the advancement of the fintech industry has improved rather quickly.
In 2008, although financial technology played an important part in our society, the financial crisis at that time was hugely attributed to the vast and intense expansion of the industry. Since the financial crisis, a large number of Americans have become angry with the banking system, creating doubt for banks in just about any country. Distrust on banks has eventually become worse when banks stopped lending following the recession. As a result, many people in the business arena and in practically all sectors were considering alternative and private lending institutions.
As the economy has at last rebounded, consumers are however cautious about binding financial institutions. Today, the financial technology industry is more trusted as a reliable source of funds and other services due to the urgent need to seek technology alternatives.
Today, more advances in the financial technology have taken place with the introduction of bitcoins or what has been known as cryptocurrency.
Financial Technology Loan Options
FinTech Mid Prime Loans
The most recognizable form of FinTech form of financing for small businesses is medium loans or mid prime lending. The price offered by FinTech’s medium-term loans is viable with a classic bank and SBA loans, however with less of the hassle that’s commonly linked with each kind of financial loan. Online FinTech lenders do not need to contact banks and provide a wide range of personal and business financial documents, but they can easily qualify applications in a matter of minutes and can provide funding very quickly (within a few days after an application had been approved). All this can be achieved with the least amount of documents that are traditionally required by the banks.
Invoice Factoring via FinTech
Financial technology invoice financing can be described as a means for small businesses to work with their 30-90 days unpaid invoices to get funding. The factoring company forwards a small amount of the invoice to a certain percentage of the invoice value less the fees after which forwards the final figure to the borrower after the invoice is settled.
Cash Advance Via FinTech
Cash advances through Fintech are not loans. However, it is the future earnings of a company sold to FinTech lenders in return for upfront funding. These future earnings are sold at a discounted price to the funder. Lenders associated with Fintech evaluate the cash flow of a company by taking a look at bank statements which includes credit card statements. This is for them to figure out the total deposits as well as the consistency of deposits.
After the FinTech funding company determines the maximum amount that a small business can easily manage, they are going to compute the amount of money the business could get depending on the repayment structure in 4 to 21 months. Following the financing of a small business, FinTech’s prepaid cash lender will receive a repayment every business day but some will collect weekly by means of ACH through the bank account of the small business or the percentage of daily credit card processing trades accumulated every day.
SBA loans are not generally linked to financial technology, but as a result advancements in many sectors of our society, specifically the financing industry, lenders can now qualify applications for SBA loans in just minutes and fund SBA loans at the quickest possible time, approximately 7-10 business days.
Technology has streamlined the SBA loan processes which allowed business owners to obtain bank financing within a time frame in line with competitive alternative lenders and actual investors. There are many forms of Fintech SBA loans. This includes lines of credit and term loans. Fintech SBA loans can be used as working capital, purchase of real estate investments, debt consolidation, business expansion, and much more.