Traditional Bank Loans vs. Silo: Making the Best Choice for Your Produce Business

Traditional means of obtaining funding are slowly falling out of favor as the availability of numerous alternatives have become a more attractive option for small and medium-sized businesses.

Non-traditional funding is growing in popularity over traditional bank loans due to their speedier approval procedure, flexibility, and their ability to respond to individual demands and situations. Fintech solutions have played a key role in the rise of alternative funding to meet the demand for financial services that provide funding based on accurate business data.

Let’s take a look at what you need to know about traditional vs. alternative funding, and why Silo emerges as the top capital provider for perishables and fresh produce businesses operating within the very complex supply chain of food.

The role of fintech in alternative funding

Fintech (short for “financial technology”) refers to the use of technology to enhance the way that financial services are delivered. Companies that operate in the fintech field may offer, for example, personal finance tracking apps, credit card comparison calculators, payment solutions, or non-traditional business funding linked to a Enterprise Resource Planning (ERP) platform.

Non-traditional funding in particular has been gaining traction among supply chain businesses looking for financial services that are more efficient, speedy, and cost-effective in comparison to conventional commercial banks.

One great example of this is Silo. Silo’s fintech offerings include:

• An ERP platform that automates and optimizes various financial procedures, which makes payments and collections simpler and risk-free

• A capital program that provides businesses with easy access to working capital via Instant Pay and Cash Advance

How is Silo different from traditional financing?

Traditional bank loan agreements are done so in accordance with the directives of a central bank or a national government. As such, these financial arrangements heavily lean in favor of larger businesses, typically requiring collateral, fixed repayment terms, and an ample amount of time and paperwork. 

This can create barriers for small and medium-sized businesses in obtaining the capital necessary to thrive.

That’s where Silo comes in as a counter to traditional business loans. Silo as a company focuses on resolving the financial issues faced by small and medium-sized supply chain businesses by providing an alternative avenue for financing. Approval is much easier and access is discreet, which is especially vital for businesses that want to keep their financial situation under wraps.

We also understand how valuable your business partnerships can be, which is why Silo doesn’t act as a third-party collector, but rather, provides access to the funds necessary without interfering with the collections process. This effectively eliminates the risk of damaging the relationships you’ve worked so hard to build.

And unlike the generic loans provided by banks and other means of financing through non-traditional business loans, Silo’s offerings are tailored to your business, they offer a discreet experience, and provide funding based on expected future sales, not just last month's AR. In an industry that is all about timing and opportunity, successful businesses are pivoting to leverage these new solutions to provide them with the cash on hand needed to seize the potential for expansion.

The importance of working capital and how Silo helps

One constant amid the fluctuations of the supply chain is the need for working capital. Having access to adequate working capital is critical for success in this dynamic and fast-paced sector, whether you're a small grower-shipper or a medium-scale distributor.

Working capital is vital to every business, particularly in the supply chain sector where supply and demand may vary considerably. It’s crucial to have adequate cash on hand to buy inputs, as well as pay labor and shipping costs, to ensure a consistent supply of products to deliver to market.

As mentioned, however, many businesses find difficulty in obtaining the funding and the working capital they need. Traditional bank loans can take time to process and be difficult to be approved for since they require considerable documentation and collateral. 

This long approval process is less than ideal for the fast-paced nature of the supply chain sector. With seasonality and uncertainty at the forefront of this industry, conventional banks may also be unwilling to lend to supply chain businesses.

Working capital becomes much easier to access with Silo. Silo understands the industry's unique demands and challenges, and our Instant Pay and Cash Advance offerings have been customized to meet the needs of businesses operating in the supply chain. 

Silo's Instant Pay allows businesses to free up cash flow by funding up to 90% of their invoices. This means that instead of waiting weeks for customers to pay you, you can have the cash you need within a matter of days to buy additional inventory, pay suppliers, and cover important expenditures.

Meanwhile, Silo's Cash Advance provides you with a flexible and personalized means of funding based on your expected sales revenue. This means that your total available balance can expand with your company, giving you the working capital you need to leverage growth opportunities, expand your operations, and invest in your long-term success.

With all that said, making the best choice for your business means opting for Silo over traditional bank loans.

Book a demo with Silo today!