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Benefits of Bank Loan Alternatives

Published on 3rd July 2018 - Last update on 16th September 2019

Deciding to become your own boss can be a very rewarding step on your career path. But there are many obstacles that you need to overcome if the move is to be successful. As a small business owner, one of the biggest challenges you need to contend with is the matter of funding. Naturally, your first thought might be to approach your bank. Although high street banks still play a vital role in the business lending landscape, they may not be able to help if you have a limited trading history. This is why a growing number of SME business owners are choosing to seek Bank Loan Alternatives. Bank Loan Alternatives describe a wide range of business finance solutions that could provide funds for a variety of different reasons. So if you’re looking for funding opportunities outside of your local high street bank, some of the reasons why should explore Bank Loan Alternatives include:

  • Access to a wide range of products
  • Suitable for a variety of purposes
  • Access to large lump sums
  • Suitable for a variety of financial situations
  • Variety of repayment methods available

What Bank Loan Alternatives are available?

If you’re looking for a suitable alternative to a bank loan, for whatever reason, you have plenty to choose from. By choosing to explore this route you could apply for products such as Secured and Unsecured Business Loans, Invoice Financing, Merchant Cash Advance or even Inventory Financing. Although this helps to make finance available to a wide range of business, each of these products work and provide funds in different ways. This is why you need to fully understand each product on offer before submitting an application or speak with a qualified business finance professional who can support you in choosing the most appropriate solution for your requirements.

Looking to purchase new equipment or gain a cash injection? Turned down by your bank? Apply for a Bank Loan Alternative or learn more about how your business could benefit.

What can I use a Bank Loan Alternative for?

Because many of the products on offer possess little or no usage restrictions, there are no limits to what a Bank Loan Alternative could help you achieve. Just some of the possible uses for a Bank Loan Alternative include acquiring new equipment, purchasing valuable machinery, supporting uneven cash flow or simply giving your business a cash injection. So, no matter what your business needs to succeed, applying for a Bank Loan Alternative could present you with an appropriate solution.

How much can I borrow?

This can vary depending on the product and how funds are calculated. Whilst products such as secured business loans can offer you up to £1,000,000, other finance solutions present no set credit limits. However, they rely on factors such as past income, unpaid B2B invoices or the equity contained in unencumbered assets (equipment, machinery, vehicles or property). Therefore, through applying for a Bank Loan Alternative, you’re presented with a number of different ways to gain the funds that your business needs to develop and succeed.

What do I need to apply for a Bank Loan Alternative?

Again, this can vary depending on your chosen product. Whilst some products are Secured others may be Unsecured. If you choose to use a secured product you will need to provide collateral in the form of unencumbered assets (equipment, machinery, vehicles or property). Although this security boosts lender confidence and may earn you a lower interest rate, this does mean putting assets at risk of repossession should your business default. Meanwhile, unsecured products don’t use your assets as security but usually carry more interest.

Plus, you also need to consider what supporting documents are required. These could include recent and past bank statements, sales reports, profit and loss statements, unpaid B2B invoices, collateral reports or inventory management reports. This should be outlined in the documents provided by the lender, so it pays to thoroughly read through them and prepare necessary paperwork beforehand to speed up your application.

In addition, lenders will also request permission to review both your personal and business credit profile. Although it isn’t always used against you, this will allow lenders to gain a stronger understanding of how your business stands financially and help them to decide how much interest to charge. As such, they will check whether you have any CCJs, arrears, Accelerated Payment Notices, unpaid debt and a reliable history of paying off debt on time. If there are any issues, notifying lenders beforehand helps reinforce the credibility of your application. However, if you do happen to possess adverse credit, note that this will affect the interest rate that you’re offered. So the weaker your score the more interest you’ll need to pay, and vice versa.

How are Bank Loan Alternatives repaid?

Finally, depending on the product, Bank Loan Alternatives can also be repaid over an agreed term using a variety of methods. While most products are gradually repaid using fixed monthly repayments, other solutions may employ different techniques. Depending on the product, you could repay the funds you’ve borrowed using either flexible monthly repayments, deferred payments or even use the money owed to your business in unpaid B2B invoices. Therefore, you could find a solution with repayments to fit in with your business.

Thinking about applying for a Bank Loan Alternative?

Searching for an appropriate finance solution on your own can be intimidating for any business owner. Although you may have a goal in mind, sourcing an appropriate finance solution can prove challenging. With so many different factors to consider before entering your application, you may not know which way to turn first. However, you don’t need to go it alone. Help is at hand. If you’re looking for funding opportunities outside of your local high street bank, apply for a Bank Loan Alternative today, or find out more with Rangewell.


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David Harrison

David Harrison

Content writer