Traditional loans, commercial loans or Fintech: Which is better?

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In recent years, traditional banking has lost part of its monopolization. According to countless experts in finance, financial companies specializing in technology, Fintech, could gradually displace the traditional methods of banks, as stated by Paolo Estebes, director of Fintech Spain.

If you are in search of financing for your company and you were planning to borrow from the bank, we invite you to continue reading. We will make an approach by 3 of the methods that you could use so that you choose the one that suits you best.

 

Traditional bank loans

bank loans

They are ideal for those who still distrust technology and prefer to do everything with the traditional line of credit. Many people flee from it because of how tedious the request is and the unlikely chance of getting it. For the most part, the requirements are quite demanding and it is necessary to present guarantees.

These are the advantages they offer:

  • They are long lasting. The beneficiary has a long term to pay their fees. In addition, interest rates are small and fixed. This allows to obtain greater liquidity.
  • If your company meets the requirements, you perform all the legal procedures properly, and you have a good relationship with the bank, you can request a large loan. These are often used for an investment of great value, such as cars or homes.
  • You can opt for a refinance of previous debts.

 

Commercial credits

Commercial credits

They are focused on companies, so if you meet the requirements you should have no problem in their approval. Commercial loans are small, must be paid in the short term and fees tend to vary. If the objectives are not met when obtaining the credit, it may be necessary to resort to amortization.

But, in addition, they offer certain advantages:

  • They are much more direct than bank loans. The procedure is not so long, and the requirements are not so difficult to meet.
  • Although the flow of credit is not very wide, it is ideal for SMEs that need to finance small expenses, such as buying computers, or to increase working capital.

 

Fintech

money loan

Companies of this type take full advantage of technology to develop the products and services they offer to their customers. In Mexico there are 168 fintech companies that have been in charge of especially benefiting SMEs in the country.

And what could a fintech company do about the financing my business needs? These are the main advantages for your box:

  • Fintech companies are much more practical. You can save a lot of your time by avoiding all the extensive procedure, paperwork and factoring. Instead, you will go directly to the part that interests you: receive the money.
  • Forget about going to the bank. You will be able to know the bureau of the company and make all the necessary transactions from the comfort of your home.
  • The majority of fintech are startups or medium-sized companies, so you will surely be taken more into account than if you go to a bank.
  • The types of financing they offer are simple but broad, so you can find just what you are looking for without much complication.
  • Some companies, such as the Mexican Trozi, offer unsecured loans. As they state on their website, the only requirements to opt for a loan is to be “a legally constituted company, with a bank account and with at least 6 months of operation.”
  • But perhaps the most striking and important attribute of these companies is the use of technology as their greatest resource. You can make the request, payment and credit tracking through your computer.

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