The world of alternative finance is becoming a mainstream option for many individuals and businesses in need of funding. Traditional bank loans are becoming more difficult to obtain, and the long application process isn’t practical for many people in need of a loan. In 2014, £1.74 billion was raised using alternative finance methods, and its popularity keeps on building momentum. More and more small businesses and property investors and starting to reap the benefits of alternative finance options such as peer to peer lending, pension-led funding and business loans from alternative providers.
Here are some of the reasons why alternative finance looks very attractive to many individuals and commercial companies, and why it could be the option for you.
You have cash flow problems
Managing cash flow is extremely important for small businesses, and if it’s not under control then some months you might not be able to pay your staff or you’ll have to ask suppliers for credit. Lots of companies have a tight cash flow and this can cause problems without financial help. Commercial bank loans take weeks and weeks to be accepted, whereas most alternative finance lenders can arrange finance in 24 hours or less. This cash injection could be a lifesaver for businesses struggling with cash flow, and loans can be paid back quickly. There are also many other options with alternative finance such as merchant cash advances and invoice finance which can vastly improve cash flow management.
You want freedom
Perhaps the bank is asking for security you can’t offer, or is trying to dictate how you will spend the funds. If you want financial freedom to spend the cash how you like, alternative finance is the way to go. While lenders will generally want some kind of idea what the money is required for, you will have much more freedom to decide what it is used for.
You don’t have enough proof of accounts
To be accepted for a bank loan you’ll have to fit strict criteria and provide a lot of evidence. It’s extremely time consuming, and many businesses won’t have the correct accounts paperwork if they haven’t been trading for three years or more. Of course, alternative finance providers will still want to see the figures from your business, but they are generally much more lenient and the process is simplified.
Most businesses can’t succeed or grow without funding, yet it’s almost impossible to be accepted for a high street bank loan. Alternative finance providers are offering a suitable substitute, whether long or short term, to get businesses flourishing.