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Why should you consider using a Bank Loan Alternative?

Published on 16th May 2019 - Last update on 7th July 2020

A fundamental aspect of running a successful developing business is ensuring access to sufficient amounts of capital. But for many UK SMEs who traditionally aren’t cash rich, acquiring this vital resource can be a frustrating ordeal. This is especially true if you’re unaware of what funding opportunities are available to you. Although, approaching your local high street bank may seem like the obvious solution, having a limited trading history can prove problematic. So rather than waste precious time, why not think outside of the box and explore how a Bank Loan Alternative could help instead? Describing a wide range of business finance solutions, you still have plenty of ways to gain the funds that your needs to grow and thrive. So, if you’ve been turned away by your bank or simply wish to know more about the various funding opportunities that are available to you before making your decision, here’s why you should consider applying for a Bank Loan Alternative.

What Bank Loan Alternatives can I apply for?

By choosing to explore your Bank Loan Alternatives you can still gain access to the same types of products that you would with your bank, as well as other financial solutions that you might not be aware of. This means that taking advantage of this pathway further enhances the range of products that you could benefit from. As well as Secured and Unsecured Business Loans, you could apply for anything from Invoice Financing, Merchant Cash Advance, Asset Finance and Overdraft Replacement to Inventory Finance. But before deciding, it makes sense to be fully aware of how each product works in order to source the most suitable finance agreement for your needs, and one that could save your business both time and money.

Do you have an important business project you want to get started? Applied for more traditional forms of funding but got turned down? Apply for a Bank Alternative or learn more about how your business could benefit.

How much can my business borrow using Bank Loan Alternatives?

This depends entirely on the type of Bank Loan Alternative you’re interested in applying for and how funding is calculated. So whilst some products (such as secured business loans) offer up to a set limit, there are other products which don’t impose any borrowing restrictions other than what the lender is willing, or able, to lend. That’s because, rather than relying on how much confidence a lender has in your business, these products take into account other factors such as past income, sales reports, unpaid invoices or the amount of equity held within unencumbered assets. Therefore, by exploring your Bank Loan Alternatives, you could borrow all of the funds you need to support your business in total confidence.

What can Bank Loan Alternatives be used for?

Although some of the business solutions available are only meant for specific purposes, many of the products that are on offer carry little or no usage restrictions. So depending on your chosen finance solution, applying for a Bank Loan Alternative could give you free reign to support, develop and maintain any aspect of your business. Therefore, if you’re looking to scale up, acquire new equipment, obtain valuable machinery, carry out refurbishments, support uneven cash flow, cover operating costs, gain a cash injection or even restock your inventory, applying for a Bank Loan Alternative could provide you with an appropriate solution.

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

Before applying, you need to decide whether or not you wish to apply for either a secured or unsecured finance solution. If you’re going to use a secured product, your business will typically need to present unencumbered assets (equipment, machinery, vehicles or property) as collateral. This reduces the amount of risk the lender is taking om and could earn you a more favourable interest rate. However, should your business default or fall behind in the repayment scheme, this also puts your assets at risk of repossession. On the other hand, unsecured products don’t require you to make such a commitment. Although this can be useful if your business lacks assets or you prefer not to put them at risk, these products usually carry more interest, tougher lender criteria and could affect how much your business is able to borrow.

Plus, as well as making sure you’ve got all the necessary documentation, you’ll usually be asked to grant lenders access to your personal and business credit profile. This provides lenders with the means to assess how well you’re performing financially and the risk of your business defaulting. To do so, they’ll incorporate into their search whether you have outstanding or past CCJs, arrears, Accelerated Payment Notices, unpaid debt (e.g. credit card debt) and your history of resolving debt on time. However, although possessing an adverse credit rating may not always result in your application being rejected, it will affect the interest that you’re offered. So if a lender perceives your business to have a high risk of defaulting due to you having a weak credit rating, you’ll be required to pay more interest throughout the agreement, and vice versa.

How long will I wait for a decision?

Depending on the product and the complexity of your request, a Bank Loan Alternative could be agreed in as little 48 hours, with the funds following soon after. That’s because alternative finance lenders tend to be able to come to a decision quickly compared with more traditional routes. For any business in the midst of an emergency or cashflow shortfall, this can make all the difference. So if you can’t afford to be kept waiting around, perhaps applying for a Bank Loan Alternative could help?

Could your business benefit from a Bank Loan Alternative?

Capital is the lifeblood of every business, regardless of size or sector. Without it, you’d quickly run into trouble maintaining day-to-day operations and delivering goods and services to your customers. However, if you believe that your business could do with some assistance, your first instinct might be to approach your bank. Although high street banks still play a vital role in supporting UK businesses, having a limited trading history could render them unable to help. So if you’re a developing SME with big plans, why not skip to the chase and make your first port of call a Bank Loan Alternative instead? Thanks to the Alternative Finance Industry you could gain access to a diverse array of specialist business finance solutions and lenders. So all you need to do now is source an appropriate agreement for your business, including both unsecured and secured business loans. So, 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