If you’re short on funds to pay your VAT bill, or need money to pay for new stock, new equipment or the end of month payroll, alternative finance can be a lifeline. In fact, that’s exactly how 70% of businesses describe alternative financing.
According to a recent report, 7 in 10 small businesses say they wouldn’t have been able to survive the cost of living crisis that hit the UK 18 months ago without alternative finance providers.
Here’s why it’s worth considering ahead of traditional routes like your usual business bank.
1. High street banks want you to jump through hoops
Lenders have cut back on small business loans in recent years, making it harder and harder to get finance. A 2024 report by the Treasury Committee found small businesses were facing ‘needlessly tough’ conditions imposed by banks and regulators.
For those banks who are willing to lend to SMEs, the application process can be incredibly arduous and time consuming. Extensive multi-year business plans and a perfect credit score are often pre-requisites, leaving many entrepreneurs either unable to proceed with the application, facing a lengthy delay or being outright rejected due to not meeting demanding criteria.
If you have a poor credit score, a high street bank likely isn’t for you. Alternative financing, such as a working capital loan, is a faster option with far more realistic requirements. They can be processed in a just a few days, giving you the speedy injection of funds you need to continue with business as normal.
2. More flexible, personalised terms
When you go to a high street bank or use a credit card to bridge a cash flow gap, the terms and conditions are usually blanket requirements that apply to all. They won’t take into account the specific nature of your business, how you get paid or any seasonal variations.
Alternative finance will often offer flexible payment terms and be better tailored to your circumstances. This means that the terms are way more favourable and better suited to entrepreneurs and small businesses. You could stipulate the desired loan term for example or agree a repayment amount that is more manageable. You may even be able to customise the amount of the loan to better fit your needs.
When you need cash fast, it’s easy to overlook the importance of reading the small print. But having access to flexible terms could be a life saver. After all, you don’t want your financing to make life even more difficult for you in the medium term by saddling you with hefty repayments you simply can’t afford.
3. Faster access to the required funds
Alternative finance isn’t tied up in the same bureaucracy that high street lenders are defined by. High street banks have specific processes to follow. Your application may go through several different teams, meaning it can be a slow process. If you’re facing a cash flow gap, waiting weeks for your loan application to be processed only to find out that it’s then been rejected leaves you high and dry.
Alternative finance is much more dynamic, with some loans approved in a matter of hours. That means cash could land in your bank in just a few days. Not only aren’t you sat tapping your fingers waiting to find out if you will have access to the funds you need, but you can also get on with the job at hand. Importantly, you can focus on running your business without the worry of not being able to process payroll or having debt collectors turn up at your door.
4. You can use alternative financing for any purpose
Alternative financing can be used for a wide range of needs. From helping you through a tight spot when sales fall to paying for new equipment, inventory, an office move, or tech upgrades, the money is there to help secure the long-term success of your enterprise.
The nice thing about this is that it gives you options. And you don’t necessarily need to give up a stake in your business to access those funds. If you spot an opportunity in your market and need to move fast, you may not have cash in the bank to make it happen. Because you can apply quickly, get your money without long delays and use those funds for whatever you want with no questions asked, alternative finance could secure the health of your business both now and well into the future.
5. A wider choice of finance products
Traditional lenders have a limited range of finance options, giving you very little choice when it comes to borrowing. Alternative finance isn’t tied to those same narrow possibilities and as a result, there’s a much broader range of alternative funding options to choose from.
Common examples include cash advances, equity crowd funding, peer-to-peer lending, invoice financing and VAT and HMRC loans.
We can help
If you’re looking for a small business loan, we can help. We work with entrepreneurs just like you and make it easy to access the funds you need to drive your business forwards.
We’re fast, flexible and we don’t require a perfect credit score or 100-page business plan. We also have a range of options, so we can tailor our financing to your specific needs, setting you up for success.
Being an entrepreneur can be a lonely road, and we’re here if you find yourself in a tight spot. We’ll roll up our sleeves and get to work, helping you restructure and write off your existing debt.
Why wait? We move faster than any bank could and can have the cash in your bank in just a few days. Get in touch to find out more.
