What characterizes alternative lending?

Alternative lending is characterized by a classification in which the borrower's repayment ability may be uncertain. This type of lending typically targets individuals or businesses that may not qualify for traditional financing options due to factors such as lower credit scores, inconsistent income, or a lack of established credit history.

In the alternative lending landscape, lenders often take on more risk and may evaluate borrowers using non-traditional metrics or criteria, which allows them to provide loans to those who might otherwise be overlooked by conventional banks or credit institutions. This flexibility is essential for borrowers who need access to funds but do not fit the established criteria used by conventional lenders.

The other options misrepresent the nature of alternative lending. For example, guaranteed repayment schedules do not typically characterize alternative lending, as this financing often involves a higher risk of default. Additionally, alternative lending includes a broad range of lenders, not just limited to government institutions. Lastly, it’s not restricted to residential mortgages; alternative lending encompasses various types, including commercial loans and personal loans.