Alternative business finance in the UK is any type of borrowing that doesn’t come from a mainstream provider like a bank in 2021. However, the banks often have a criteria which smaller businesses (SME’s) cannot fulfill, so small and medium-sized business needs other funding options.
The UK’s “alternative finance” industry has grown by 43% over the last year to £4.6 billion, according to a new report from the University of Cambridge. The growth across in the United Kingdom over the last decade spurred by a range of new online platforms such as a credit broker, peer-to-peer lenders Funding Circle and Invoice Funding, and crowdfunding services like Crowdcube and Seedrs.
These startups form part of Britain’s booming fintech industry.
What is Alternative Business Finance?
Alternative business finance is a type of funding that is not provided by mainstream lenders such as the high street banks. This type of funding has become a popular business funding solution for startup companies and small business owners operating in the UK that are looking for cash flow funding in 2021.
As we move in to the new year, the high street banks continue to cut back on the availability of funding, this is where alternative providers have stepped in to offer a wide variety of business funding alternative products that are aligned with modern businesses.
These days, there’s a huge variety of lenders available with hundreds of products, including the British Business Bank, with this much choice in the market place its difficult not to find an alternative to business loans that’s right for you.
This type of lending is not authorised and regulated by the financial conduct authority due to the speed it can be implemented.
Why choose alternative financing?
By choosing this type of financing options for your business have many benefits when compared with their more classic counterparts. The fact that they often don’t take into account an applicants credit score, or how long they’ve been in business, makes them far more accessible to customers than a regular bank loan.
Alternative financing solutions for small business that an owner of a venture have at their disposal today are practically endless and can differ to your tastes depending on the timing and what state your business is currently in. So, stop worrying about your assets, as you won’t have to use them for collateral, and you won’t have to wait for months on end for a bank to approve your loan application.
Alternative Business Funding in the UK
Many business owners deem traditional bank loans as ‘one-dimensional’ and out of touch with the small business and SME’s. With a conventional bank loan, there are standard requirements such as business plans, forecasts, personal security guarantees and a never-ending amount of application paperwork.
As the banks continue to cut back on the availability of funding solutions across the UK, none traditional funding providers have stepped in to offer a wide variety of different products that are aligned with modern businesses. Alternative funding is a great solution to assist with working capital, this money can be used to invest in new premises, refurbish an existing property, increase stock or purchase equipment.
Types of alternative business finance
There are many different ways of acquiring finance for your business, but choosing the right type of funding options for your company/venture is absolutely key for success. Take the time to consider the variety of options you have available to you and make your decision afterwards. Taking the wrong option can sometimes backfire and you’ll want to give your business the best opportunity to achieve growth.
Short-term business loans work just like longer ones, with the exception of your rate. Instead of an interest rate, you’ll likely be quoted with a ‘factor rate’ so you’ll need to calculate that cost in order to translate the APR. A short-term loan is a good finance option for businesses that need funding right away. This is because you’ll typically receive your funding within a few days and be able to make the purchases your business needs to succeed very quickly.
This is a good option for people that either have a slow cash flow or customers that seem to often pay their invoices late. Invoice financing or invoice factoring as it is also known as is basically where lenders will offer you anything from 75% to 90% of your outstanding unpaid invoices, which is recouped when your invoices are paid. In most cases you will only be charged a flat rate for the advance on this type of financing with only one percent added for each week the loan remains outstanding.
This type of financing is great for new businesses who’s customer are other businesses.
Merchant cash advance
A merchant cash advance is all about your business’ credit card sales. In this case the lender will advance funds to you, which will in turn be paid back as you make daily debit card sales. A previously agreed percentage of your sales is paid back to your lender, meaning you’ll only begin to pay back your loan as you make money yourself. This can be a useful way of avoiding any nasty surprises other options can spring upon you; if your business is having a slow sales week, you won’t be paying as much back to your lender.
Your business will likely have to be at least a year old to secure this kind of funding, but your credit report will not be taken into account in most cases. This makes PDQ Funding as one of the leading merchant cash advance providers a popular option among people that have had a more difficult time with their past credit ratings.
- Only pay back on future credit and debit card sales
- Works in line with your cashflow
- Unsecured cash injection (no assets required)
- No fixed monthly terms
- No business plan required
- High approval rates 90 – 95% acceptance
- Less paperwork and hassle
- Works with your existing PDQ Machine provider
- Cash Advance of £5,000 to £200,000
- Same day decision and funding within 48 hours
- Your cash sales are safe, only card payments are used to repay
My personal credit file has bad credit, will I still be accepted?
There are no guarantees, however due to the flexibility of this loan, CCJ’s and adverse credit can be considered, and many past cases have been approved with bad credit in place. There is an 90 – 95% acceptance rate on this product. Alternative types of business funding like cash advances for business do not do credit checks. Business Cash Loan With No Credit Check is a perfect fit for anyone who is worried about their credit score and the chances of being accepted for alternative business funding.
Does this type of company finance work with a poor history or bad business credit score – Depending on the circumstances and type of finance arrangement offered, businesses with no or poor credit histories could be considered for funding. So, if your business has received a CCJ or missed repayments in the past, it is worth applying for this type of alternative finance to see whether you qualify.
Contact Us Today
If you would like to discuss your businesses financial requirements in a view to using none traditional lending methods. The process to get started is simple, complete the online inquiry form and a business lending specialist will contact you in regard to your alternative business funding enquiry.
Should you wish to discuss different funding options available to your business, the process is so simple. Entrepreneurs who tap into these valuable services are seeing growth within their businesses. Having access to quick finance without the administration many high street banks impose. This means many small businesses are able to continue to grow without the stress of trying to find finance.
Visit our application page and provide the relevant information. This will ensure that we match you with an ideal lender. We will then ask you for further information about your business. You’ll need to be ready to tell us the following:
- The name of your business
- How long you’ve been in business
- Registered office address
- Your average monthly card sales turnover
- Company number if registered in England and Wales
- The amount you are looking to borrow
Will will then require a few personal details, so please be ready to tell us:
- Your title, along with you first name and surname
- Position you hold within the business that is seeking a loan
- Email and telephone number, so that we can stay in further contact with you
Read through our terms and conditions carefully, and if you’re happy to continue, click ‘get a quote’. From here your application will be processed and reviewed by a member of our business finance suppliers team, who will help you find the correct lender for your emergency business loan.
We will then be in touch with you to confirm the conditions of your business loan agreement.
Once the application is complete, it will be sent off and approved by a lender. You can then have a discussion with them regarding the terms of the Finance. These terms will include interest rates, as well as how much the borrower will repay each month. The loan is then provided to you on an agreed and transparent basis and terms and conditions apply, subject to status.
Alternative Business Finance, what is it?
Alternative business finance offers a wide range of innovative funding products for the business sector. This type of funding is designed and structured differently to traditional business finance products usually associated with high street banks.
Different types of alternative business finance?
Many businesses do not have assets so immediately do not qualify for secured finance. Security is not the end of the story, however. You can still access an array of funding options for your business that don’t require security. - Unsecured business loan - Merchant cash advance - Asset finance - Invoice finance - Crowdfunding for business - Peer-to-Peer lending (P2P) - Angel Investor
Does Your Business Qualify for Alternative business funding?
To qualify for alternative business funding, you must operate a UK-registered business. Your company can be at any stage of the business lifecycle, from start-up businesses to a growing SME. It can also be any legal type of business from sole traders, limited businesses, LLP's and Partnerships.