alternative business finance

alternative business finance

Exploring Alternative Business Finance: A Comprehensive Guide

1. Introduction to Alternative Business Finance

Don’t face a financial crisis unprepared; let this book be part of your preparation. Hundreds of businesses have already applied alternative finance solutions to the challenges that threaten their long-term stability. Whether companies needed a fast cash injection or a sales boost, wanted to finance growth plans, or simply needed an external financing injection to help them set up and get started, those businesses used alternative finance. However, alternative business finance is not reserved for businesses in dire trouble or young start-ups. As this book will show you, the companies that seek to use alternative business finance are from every sector. They are any size and of any age, including well-established companies, partnerships, franchisees, and not-for-profit organisations. Any business, sole trader or not, that is in need of money or is seeking a solid solution to any number of business challenges could consider using ‘alternative finance’ if they meet the minimum requirements of most alternative finance lenders, suppliers or even conduits.

In 2019, alternative business finance is no longer the ‘new kid on the block’. As a business finance alternative to traditional forms of credit like bank loans and overdrafts, asset-based lending and venture capital/angel investment, we’ve seen the rise of increasingly innovative and flexible solutions to help businesses manage their finances in a crisis, to take advantage of an opportunity or to simply meet the challenges they face in getting paid, making payroll or addressing growing overheads. Nevertheless, there is still some confusion and misunderstanding about what alternative business funding is. What is fact and what is fiction? This guide, ‘Exploring Alternative Business Finance: A comprehensive guide’, is designed to provide both administrators and decision-makers with a background to alternative business finance and introduces lenders to the funding options they have at their disposal.

2. Types of Alternative Business Finance

Finding, managing, and securing the right finance for your business can be a tricky and time-consuming process. Understanding what types of business finance are available is a crucial step in finding and securing the right deal for your business. Before securing any finance, it’s important to understand the purpose and requirements of a business’ finance requirements; a business with ongoing capital might require a long-term facility, whereas a business with an unexpected cash flow issue arising from a slow-paying client may benefit from an invoice finance facility. As experts in dealing with business finance, we can assist in guiding your business finance requirements.

There are various different types of alternative business finance available to businesses in the market, each with their own purposes, benefits, and downsides. It’s important to have a good understanding of all of your options to ensure you’re picking the right type of finance for your business. There is no one-size-fits-all solution for raising business finance; what’s right for one business won’t be right for another. It’s essential that you explore all your different options and familiarize yourself with the most suitable types of business finance available to you.

3. Benefits and Challenges of Using Alternative Business Finance

Overview of Alternative Business Finance Today, many non-traditional commercial finance companies now offer a variety of vertical and horizontal financial capital alternatives. Most of these business models are not regulated financial institutions, commercial banks, or government-sponsored programs. In addition, many do not have the same lending criteria for business loans and work capital that most lending institutions use to qualify prospects. While every customer values low rates, money alone is supplemented in earlier and often greater concerns. Getting the company up and running, expanding the operations, acquiring a competitor, stabilizing without faster-growing operations, taking the product or service to the customer, hiring staff, and being able to satisfy orders are just a few instances of the main activities of corporation money. As we have introduced in this publication, identical macroeconomic forces such as supply and demand decide the cost of conventional sources of money.

In this chapter, we are looking to explore some of the financial challenges that small and medium-sized business owners face, their needs at different stages of their businesses, and available products. We will also be discussing the benefits and drawbacks of the primary horizontal and vertical products commercial business financial institutions offer. By understanding the basics of traditional capital products, including loans and credit lines; and accounts receivable, purchasing, and equity factoring and funding, businesses owners can quickly provide a variety of services to support their growth and expansion objectives while controlling ownership and avoiding the pitfalls of excessive debt.

4. Case Studies and Success Stories

Business finance retailing is not party to some of the issues that traditional banks and other financial institutions face, especially in the current economic conditions. This could make these useful retailers increasingly valuable commercial finance services and assistance important for many businesses, regardless of size and present circumstances. The alternative finance solution success stories outlined in the practical guide will show you how many firms, just like yours, have been able to find their niches in the business world and how taking full advantage of their skills, knowledge, experience, and flexible finance products and services ensures that their businesses develop and flourish. Their experiences illustrate very well how they found the right ways of moving forward to profitability and success by being innovative, flexible, practical, and commercial. With the range of practical help also available to you – not to mention individual support – we are confident that your business will also take to these ideals and thrive within its chosen sector.

Circumstances might conspire to make it more attractive to use alternative business finance options through necessity rather than choice. This is especially true in the current economic climate where traditional business financing can be difficult or even unavailable. Financiers and their flexible products and services are therefore playing increasingly important roles in funding a wide range of activities. Although in the past, these firms have provided their services to larger companies, it is small- and medium-sized businesses that are driving the move towards alternative sources of cash. Commercial finance retailers have become essential in helping entrepreneurs overcome these problems as they can offer much-needed trusted advice and support, as well as trying to meet those needs for flexible finance.

5. Future Trends in Alternative Business Finance

Issues like the Brexit referendum, the interest rate rise and the tightening of credit for small businesses would have directly impacted on the success and developments of the alternative business finance industry. It would also seem likely that more providers are prompted to optimize their lending decisions by using the latest technology, making the lending process more efficient and fully automated, and then passing on these efficiency savings to customers in the form of better deals. Small and medium-sized businesses are faced with challenges such as slower growth rates, increased domestic strains, higher commodity prices, increased labor costs, tariffs, and changing customer behavior. Lenders would need to be smarter in their operations in order to better match the best form of business finance to these challenges.

One of the main trends in the alternative business finance market is the increased use of technology, meaning that more providers are making use of the latest online platforms to bring borrowers and lenders together and process applications more quickly and efficiently. The use of technology was somewhat limited in the industry’s early days, but in the current environment, we’ve seen a boom in digital-first businesses that are looking for faster and more flexible forms of finance to keep pace with their own development and success. Rather than having to provide a business plan, visit a bank manager and then wait weeks for a bank loan to be approved, it is often now possible to access a likely pool of potential lenders with details of the finance required, use an online platform to provide details about your business and its growth to date and receive approval within 24 hours, plus the funds in your bank account within days – or even hours.