How to apply for a Bank Loan Alternative

4th June 2018

The lifeblood of any UK business, regardless of size or sector, is capital. A vital component for achieving growth and long-term sustainability, it’s a necessity you simply can’t do without. However, if going down the traditional route, raising the funds that you need to move forward may be difficult. Although local high street banks still play a vital role in supporting British business, having a limited trading history or an, as yet, unproven business model can render them unable to help. But before you decide to abandon your plans or draw funds from your own savings, you could explore an alternative pathway. Thanks to the mainstream prominence of the Alternative Finance Industry, you could access to a wide array of Bank Loan Alternative products, ranging from Secured and Unsecured Business Loans, Invoice Financing, Inventory Financing, Commercial Mortgages and Overdraft Replacement to Merchant Cash Advance. So if you’ve been rejected, or simply wish to maximise your exposure to the entire business lending landscape before deciding, here’s what you need to apply for a Bank Loan Alternative.

Will I need to provide collateral?

This depends entirely on the finance solution you’re thinking of applying for. But before doing so, you need to fully understand the difference between Secured and Unsecured products and how either can affect your application. Products that are Secured require you to offer the lender collateral, usually in the form of unencumbered assets such as equipment, machinery, vehicles or products. Although Secured products often carry less interest (compared with Unsecured solutions), this also means putting your assets at risk of repossession should your business default on the agreement. Meanwhile, if you aren’t asset rich or you’d rather not put them at risk, you still have the option of using an Unsecured business finance solution. Not requiring you to provide collateral, this transfers a greater degree of risk on to the lender. As such, Unsecured products typically carry more interest can be challenging to qualify for, especially if you or your business has an adverse credit rating.

Are you looking to support growth or smooth out uneven cash flow? Have you approached your bank but weren’t satisfied with what was on offer? Apply for a Bank Loan Alternative or learn more about how your business could benefit.

What documents will I need to submit?

When choosing a Bank Loan Alternative for your business, make a note of what documents you’ll need to submit with your application. These should all be outlined in the documents that you’ll receive from the lender when enquiring, which could include proof of identity, latest and past bank statements, profit and loss statements, sales reports, inventory management reports, collateral documentation, unpaid B2B (Business-to-Business) invoices or your Standard Industrial Classification (SIC) code. Therefore, in order to ensure that your application runs as smoothly as possible, try to get all the necessary documents ready beforehand.

Will I need to grant lenders permission to review my credit profile?

Although your personal and business credit profile won’t always be used against you, lenders will typically request permission to review them. The reason for this is that lenders use your credit profile to gain a stronger understanding of how well you and your business are performing financially. As such, lenders will incorporate in their search whether you have past or outstanding CCJs, arrears, accelerated payment notices, unpaid debt (eg. credit card) and your history of resolving debt on time. However, although it may not always lead to a rejection, possessing an adverse credit rating will affect how much interest you’ll be charged throughout the agreement. Therefore, the weaker your score the more interest you’ll need to pay, and vice versa. If you have any concerns regarding your credit rating, you can read more on the subject here.

Thinking about applying for a Bank Loan Alternative?

Despite external funding being an essential resource for many UK businesses, acquiring the financial support you need to move forward with your goals can be a headache. But if you’ve been let down when using the traditional route, there are other pathways available that could prove more appropriate. If you need to acquire additional equipment, purchase machinery, upgrade IT systems, move to another location, gain a cash injection or replenish your inventory, a Bank Loan Alternative could be the answer that you’re seeking. But with so many different business finance products and lenders to choose from, how you can you be confident that you’re choosing a suitable, cost-effective solution for your business? Simple.

At Rangewell, we’re an Access to Finance specialist working with over 300 lenders to offer you an overview of more than 23,000 business finance products. Our services are free to use and we’ll also guide through the application process. We’re with you every step of the way. So if you’re looking for a suitable Bank Loan Alternative, apply today or find out more with Rangewell.


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David Harrison

David Harrison

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