What is Alternative Finance?

In simple words, alternative finance means any sort of finance apart from a conventional high street bank loan. There is a wide selection of alternative finance options available, ranging from cash flow loans to invoice finance; available for both small and larger businesses in all industry niches.

Alternate finance options can provide businesses with a helping hand in managing their daily operations, achieving larger equity venture capital deals or completing large-scale projects, which would not otherwise be possible.

However, in some circles, SMEs are not utilising these opportunities to the fullest extent. According to a recent report made by the House of Commons on access to finance for SMEs, the main obstacle seems to be a lack of awareness and understanding on how these finance solutions may meet the requirements of a growing or new business.

Around 70 percent of businesses looking for finance only approach one lender. If they get rejected, it is often the case that they are disheartened and give up without seeking alternative options.

Last year, over 200,000 small businesses asked for an overdraft or bank loan. Out of these, 25 percent were declined in the early stage and of those, only 7 percent were informed about seeking finance from other sources.

How Can SMEs Find Suitable Finance?

The best way SMEs can empower themselves is by reading up on all the options available to them. If you are a young business owner or do not have the required experience, then it might be worth seeking assistance from a good independent broker.

They know the market well and they will know the products available out there, taking the initial burden off your shoulders.

What Type of Projects Can Be Handled Through Alternative Finance?

Alternative finance can do the same as conventional forms of finance do for businesses. It can be used for all sorts of business projects such as:

·      Cash Flow – Finance is used for maintaining good cash flow when a huge order has been received, or for short-term working fund boosts for things like a tax bill that has come up suddenly and cannot be paid whilst capital is tied up elsewhere.

·      Large Scale Projects – Finance can be used when a business is looking to expand, undertake renovations or open premises in new areas or even for merging and taking over other businesses.

What to Expect from an Alternative Cash Flow Loan?

Cash flow is deemed as the lifeblood of all types of businesses. If you are seeking cash flow funding, you should expect quick and trouble-free access to finance that is both flexible and fit for purpose.

If you use a reputed alternative finance provider like Nucleus, you can receive your payout on the same day providing the customer information is delivered correctly and in a timely manner.

Since this type of loan is a one-off, there is less of an on-going relationship with the provider and you need to know from the beginning whether the loan is suitable for you; whether the interest rates work for your business and more importantly, whether you are able to pay it back.

The Bottom Line

Making sure that this is the right funding option for your business is incredibly important. There are a lot of options, but some more traditional forms of finance can have high rates; do your research, check testimonials and shop around.

Keep in mind that the best lender may not always be the cheapest. SMEs seeking finance need to have a good relationship with a lender, so that they can dodge any financial hurdles together, along the journey towards success.

Our products and services come with guaranteed expertise, honesty and certainty. If you are experiencing cash flow challenges or want to realise your business growth plans, take a look at our range of funding solutions and apply now to get started!