Breaking Free from Banks: Exploring the World of Alternative Business Funding

Do you want the limited funding options and traditional bank loans with loads of paperwork? Don’t they feel more like dead ends to you?

Alternative business finance has exponentially developed in the UK and is now a significant source of capital for investors in small and medium-sized enterprises (SMEs). Online platforms raised £4.2 billion in 2017, which made up 68% of the alternative finance sector. Over 90% of online alternative financing for firms is debt-based, making up most of this funding.

Here’s the good news: Nucleus provides alternative funding options that could perfectly fit your business. From Nucleus business loans to revenue-based financing, these options are designed to break free from old-school constraints and open doors to a future where your business can thrive.

So, buckle up and get ready to explore how you can ditch traditional banking and embrace Nucleus, the future of funding, with solutions tailored just for you.

Traditional Banking

Traditional banking has been the primary source of capital for companies facing difficulties in 2023, marked by several high-profile bank failures and financial instability was traditional banking. The one-size-fits-all strategy frequently falls short of meeting the various needs of contemporary organisations. It’s obvious that traditional banking might not always be the ideal choice; getting a loan can be a time-consuming process that requires several steps that may take weeks or even months to be approved.

For more detailed information, you can read the Financial Stability Report by the Bank of England.

The Rise in Alternative Funding

In response to funding challenges, numerous strategies have been developed, which include Nucleus business loans, revenue-based loans, venture capital, peer-to-peer lending, angel investors, and venture capital. Alternative finance platforms, in contrast to traditional banks, sometimes feature more lenient restrictions and quicker approvals. According to a World Bank analysis, an increasing trend away from traditional banking is evident in the fact that statistics for overall finance accounted for Nucleus is over £2.9 billion, helping thousands of UK businesses achieve their goals every year. Revenue-based loans adjust repayment terms based on a business’s revenue, while crowdfunding platforms allow businesses to raise capital from a wide audience without giving up equity.

World of Business Funding

For a long time, traditional banking systems have been the go-to source for financing business. However, they frequently have strict guidelines, lengthy approval procedures and fixed terms. As a result, many companies, particularly SMEs, fail to get the capital they require to expand and innovate. Businesses now have access to various financing options that address their particular needs and foster growth thanks to alternative funding options.

This article addresses the pressing need for alternative funding options to support contemporary businesses along various needs, to overcome traditional banking’s limitations, and to support the diverse modern approach as per requirement.

Crowdfunding: The People’s Investment

Two leading platforms based in the UK, Seedrs and Crowdcube, have transformed businesses to raise capital, enabling owners to showcase their ideas to a broad audience and receive small contributions and modest financial support.

Peer-To-Peer Lending: Borrow from the Crowd

Traditional organisations like Funding Circle and Zopa are direct mediums between SME borrowers and investors, enabling direct access to funds and flexible terms. According to the figures, peer-to-peer financing has grown in popularity among SMEs in five years at around a 25% annual growth rate.

Revenue-Based Funding: For the Big Leagues

Businesses can obtain capital through revenue-based finance in return for a portion of their potential future earnings. This is particularly advantageous for companies with fluctuating revenue; businesses can receive a lump sum of capital from Nucleus. In return, we agree to share a percentage of its monthly or quarterly revenue with the investor until a pre-agreed multiple of the original investment is repaid. Payments continue as long as the business generates revenue, which varies with its business. It is especially suitable for companies with steady or predictable revenue streams.

Benefits of Revenue-Based Loans

Trade Credit: Supplier Partnerships

Building relationships with businesses and suppliers plays a significant role in terms of financial freedom. With trade credit, you can conveniently make expenses, for example, to restock inventory or pay any emergency debt or financial funding required. This quick cash can be utilised at full potential anytime and gives you the liberty to pay back later like credit card terms, which helps you manage your cash flow and gives you more time to make money before paying your expenses. It’s somewhat similar to obtaining a loan at no interest from your provider, which is worthwhile; favourable conditions should be negotiated.

Bootstrap Your Way to Success

Sometimes, your savings are the best source of funding for your business. Owning funds is similar to using just a bucket and spade to build a sandcastle. Still, the benefits can be substantial, which can help you control every penny you retain and make business decisions. Additionally, it’s a fantastic method to show potential investors that you’re committed and resourceful.

Case Study: Cocoa Amore

Based in Leicester, UK, Cocoa Amore is a chocolate store that has won several awards. When Peter Gardner founded the company in 2013, its handcrafted, premium chocolates immediately became well-known.

• As the business grew, Cocoa Amore faced a significant challenge: they needed additional capital to produce a large order of Easter eggs. Peter Gardner turned to alternative business funding that allowed him to secure funds quickly without hurdles associated with traditional banking.
• With the funding secured, Cocoa Amore was able to meet customer demand and increase revenue by successfully producing and delivering the large order of Easter eggs.
• Alternative funding’s speed and flexibility allowed the company to keep growing and adding new products to its lineup.

To sum up, alternative funding for businesses presents a novel viewpoint; you can liberate yourself from the limitations of traditional financing and seize opportunities that are more closely aligned with your company’s particular requirements and objectives by investigating and accepting these alternatives. The above case study, Cocoa Amore, demonstrates how alternative business funding can provide timely and flexible solutions to overcome challenges. The financing of the future enabled the business to continue growing and expanding its product offerings and seize growth opportunities. Therefore, instead of utilising outdated methods, take advantage of a finance choice designed to assist your company’s growth and success.

It’s time to leave the maze of traditional banking behind and explore a world of customised, flexible, and exciting financial options. Apply for a loan with Nucleus today and gain financial freedom to grow in future.