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Exploring Alternative Finance Markets

May 12, 2015

The Telegraph reported in October 2014 that lending by the leading Banks in the UK fell by £400m… But there are very interesting alternatives out there:

1. Short-Term Loans

A quick fix to plug the hole in the short-term. For example, to cover wages, fulfil a confirmed contract or to buy supplies to deliver a contract.

2. Merchant Cash Advances

For outlets, retailers, or businesses with card terminals, it is possible to get an advance on predicted card sales. This can provide support to your cash flow needs and can be used as a flexible way of raising finance when you most need it. The loan is either repaid as an agreed fee or as a percentage of sales.

3. Trade or Stock Finance

Are you buying stock from abroad against purchase orders, whilst struggling alongside to raise deposits and maintain a working cash flow?  If you trade from abroad, trade or stock finance can be useful when trying to hit a high demand and ease your cash flow pressures.

4. Online Peer-to-Peer or Crowdfunding

Instead of borrowing the money from ‘The Bank’ you can look to borrow money from one or more individuals using various online platforms. The loan required is essentially auctioned to investors with an interest rate determined by your business risk profile, required term length, industry sector and various other factors. This form of finance is now the most commonly sought after Alternative Finance option.

5. Rolling Credit Facilities

There have been new lenders emerging who offer a similar solution to an overdraft, but will usually require repayment a least once within a twelve-month period. This is normally only open to businesses and Directors with good credit history, detailed plans, forecasts, and security to offer in the background.

6. Pension-Led Funding

If you are looking to buy a property or raise cash for your business then pension-led may be a solution. If the Directors, or the business, have a suitably sized pension pot, this can be utilised for a property purchase or acquisition. The loan can also provide a higher rate of return for the pension pot than the business / Directors lent itself with at an agreed interest rate.  Or why not utilise the new regulations of 2015 to unlock your Pension to start or grow your business!

7. Venture Capitalist Finance

These are organisations and individuals who will invest in your business normally in return for a percentage of your business so here you must know what you are prepared to give away.  You could be lucky and attract the attention of an Investor who will invest in your business but also has a skill that you are on the lookout for.  However, for most Investors they like to stay silent.


If you work with a Business Mentor they would know what type of Alternative Finance would suit your organisation and we at have the A Team of Business Mentors. Test-drive us for free.

Karen Gould, Gateway2enterprise CEO

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