Alternatives to Bank Loans That Your Business Should be Using

By on September 30, 2015
bank loans

The bank is most definitely not the only resource for accessing business loans. During the recent economic downturn, many banks stopped lending at all and this compelled businesses to look at alternatives for raising finance. These alternatives have flourished and are a viable option for many companies.

Use your assets to raise cash

Raising funds through a secured loan is a great idea for accessing some emergency cash. Unpaid debts can lead to many businesses having financial problems and a secured loan could tide you over until the debts are paid. If you take a loan out on your car, you could raise 75% of the value of your vehicle and you’ll repay the loan over an agreed period of time rather than in a single lump sum. This repayment option will allow you to plan and manage your cash flow. Or you can lease the vehicle and not tie up the funds.

Simpler than a bank

An innovative scheme that puts SMEs in touch with potential funders is an alternative business funding website. The portals have 50 companies signed up that are prepared to lend money to a variety of businesses. Over 2,500 SMEs have been helped by the website. The website matches companies seeking loans with a choice of finance companies, private equity houses, and other lenders, and the borrower can then approach the most suitable lender for their needs.

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Invoice borrowing

If you have submitted a large invoice for work carried out or goods supplied, you could borrow money as a result of that invoice. As long as your customer is creditworthy, you could borrow up to 90% of the sum invoiced and you’ll repay that amount as well as interest. Look out for the reference term ‘individual invoice finance’ on the internet.

The British Business Bank

An article in The Daily Mail earlier this year highlighted that there’s a £1 billion a year finance gap holding businesses back from expansion and new investment.’ In a bid to close this gap, the government has set up the British Business Bank, which is designed to help UK businesses access funds.

It doesn’t matter whether your business is a start-up or is an existing concern looking to expand. The bank states that its aim is to ‘increase the supply of finance available to smaller businesses where the markets don’t work well.’ This is in marked contrast to the options on offer at your local high street bank. The bank’s directors and partners come from all sectors of British industry and are actively committed to creating ‘new finance opportunities for smaller businesses.’

Crowdfunding is increasingly popular

If your company is viable and you need additional funding to get a project off the ground, then Crowdfunding is a viable option. Some schemes are based on a ‘network of investors in return for an equity stake,’ according to the website Startup Donut. Other crowdfunding projects will post a projected finance target on the Crowdfunding website and hope that enough people are interested to help their project get off the ground.

If you can’t get a bank loan, don’t despair; there are plenty of alternative options.

Patrick Vernon is a freelance writer, with experience writing for a range of magazines and websites, researching various topics in order to offer useful info and content to the public.






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Alternatives to Bank Loans That Your Business Should be Using