With the rise of alternative lenders in the UK, looking for alternative business funding options could be a game changer for your business. You could get better access to finance in a faster and simpler way.
Find out about the different types of alternative funding available and learn how they can cater to your specific business needs.
The landscape of business finance is evolving, with traditional methods often giving way to more innovative and flexible solutions. Alternative business finance encompasses a range of non-traditional funding sources that provide capital to businesses outside the conventional banking framework. This type of financing has become an important way to empower small businesses that might otherwise struggle to secure funding.
Historically, businesses have turned to traditional banks for loans. These traditional sources come with their sets of advantages, such as their reliability and the potential to access larger loan amounts. However, they also bring strict requirements and lengthy application processes. In recent years, as more and more traditional banks have closed down their local branches, the line between traditional and alternative banks has become more blurry.
Alternative financing, on the other hand, offers quicker, more accessible funding solutions. This is particularly beneficial for businesses that may not meet the rigorous criteria set by traditional banks or those needing faster liquidity.
There are several different types of alternative business funding available, each designed to meet unique business needs and circumstances. Here are some of the most common forms:
Peer to peer lending is a method of financing that allows individuals to borrow and lend money directly to each other using an online platform. Generally, this allows for more accessible loan opportunities for businesses and lower interest rates.
Invoice financing allows businesses to sell their outstanding invoices to a third party at a discount. This arrangement helps businesses access immediate cash flow, which is crucial for maintaining operations without waiting for slow-paying customers.
A merchant cash advance provides businesses with an upfront sum of cash in exchange for a portion of future sales, typically from credit card transactions. It’s a suitable option for businesses with high credit card sales volumes looking for quick funding.
Unlike traditional term loans, a line of credit allows businesses to draw funds as needed up to a set limit, providing flexibility to manage cash flow dynamically.
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Choosing the right alternative funding for your business requires a thoughtful assessment of your specific needs, projected future revenue, and the costs associated with various financing options.
Consider how your business processes payments - do you primarily use a card machine, or do you invoice your customers? Understanding your transaction methods can guide you in selecting the most suitable funding source.
With so many options at your disposal, starting your search might seem daunting. A platform like Capitalise can simplify this process. By submitting a funding application through Capitalise, you can compare different funding options tailored to your needs. You will be connected with multiple lenders that match your criteria, and a dedicated funding specialist will assist you in finding the perfect fit for your business.
Capitalise is a UK based platform, our mission is to help businesses to take control of their financial health. We support business owners through our FCA regulated platform, an easy way for businesses to access over 100 lenders and compare their loan products. Our advanced platform makes intelligent matches and ranks lenders, based on their past successes, to help businesses select the best funding solution.
Capitalise also enables businesses to check their own Experian business credit score to better understand their financial health. Plus businesses can check the credit profiles of the companies they work with to reduce risk.
Some alternative business lenders consider factors beyond the business’ credit scores, so it may be possible to get funding with a poor credit score. However you should be aware that there will be limited options and you may be subject to higher interest rates.
The flexibility of alternative finance means many businesses might qualify even if they are not eligible for a more traditional term loan. However the eligibility criteria will depend on the individual lender.
You can check your eligibility for alternative finance from 100+ lenders for free when you sign up to Capitalise for Business.
