Where To Go When The Banks Say “No!”
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Where To Go When The Banks Say “No!”

Many people turn straight to the banks when they want to raise business finance. This is because historically, the banks have been the only institution able to lend large amounts of money to those who require it. Although business owners think it will be a straight forward
process to raise funds, it’s often quite difficult. Since the financial crisis back in 2008, the banks have tightened up their lending and now have a very strict set of criteria which they must follow before they can offer capital. Unfortunately, even if a business is successful and profitable, they still might not meet the required standards. The British Business
Bank estimates that 100,000 small businesses are rejected for finance from the banks each year, if you fit into this statistic rest assured that you aren’t on your own.

The Rise of Alternative Finance

Many people who try – and fail – to get business funding from the banks simply give up. They don’t realise that there are other more suitable and accessible options available. Alternative finance is a great way for business owners to raise capital and its popularity is on the rise, according to MoneyHighStreet.com “52% of SME owners are now aware of finance options beyond traditional banking.” The banks are also now legally required to pass on the details of customers they can’t help to alternative finance providers through something called the Referral Scheme.

There are many different alternative finance products available, some of them have been designed to work with specific industry types and others simply offer a modernised way of repaying the funding. Here’s a few of the most popular alternative business finance options…

The Merchant Cash Advance

If you take credit and debit card payments from your customers, this could be the perfect solution for you. The repayments are extremely flexible and work in line with your income, meaning your cash flow isn’t disrupted.

Capify was one of the first companies in the UK to provide the Merchant Cash Advance and therefore we have helped many owners to access capital in this way over the years.
Whenever you take a card transaction from your customers, Capify will take a small, pre-agreed percentage. The remaining amount will then be automatically transferred into your business bank account as normal. The amount you pay back each day will fluctuate depending on how much you process through your terminal, this means if you have a really successful and busy day you will pay back slightly more and on a slow day you will pay back less. Many owners love this method of raising finance because they don’t have to struggle to save a large fixed amount.

If you would like more information about the Merchant Cash Advance, we’ve put together a handy infographic which has details of exactly how the process works from start to finish.

The Small Business Loan

It’s not just the banks who offer business loans, alternative business finance providers do as well. Capify offers a small business loan which is repaid in very small amounts every day, rather than monthly. Lots of owners favour this repayment method because they don’t have to worry about saving up a large amount. Capify offers a short term small business loan which can be repaid between 8 and 12 months.

Other Alternative Finance Options

Whilst the Merchant Cash Advance and Alternative Business Loan are extremely popular ways of raising finance away from the banks, there are also other options available to business owners.

Peer to Peer Lending, also known as P2P, is becoming increasingly well known. People have the option to invest in a business in the hope that they will be able to make a profit back. This is done through an online platform which is fully managed, meaning both the business owners wanting to borrow, and those wanting to invest, don’t have to put lots of work into finding each other. Sometimes it can be the case that numerous people contribute small amounts to a business owner, until the required funding amount is reached. People who raise funds in this way have usually been turned down by the banks but feel confident that their business has the potential to grow once funds have been secured.

Another popular way of raising business funding is through Invoice Financing. Business owners who charge their customers via invoices usually offer payment terms of around 30 – 60 days. However, many need to access the money sooner. With invoice financing, businesses can sell their open invoices so that they can obtain the funds immediately, rather than having to wait for their payment to come through. This is a fantastic option for people who charge via invoices and need to quickly secure their cash flow.

There are many benefits of getting your required money from an alternative finance provider. Not only is the application process very straight forward, there’s also a much higher acceptance rate in comparison to the banks. Many alternative finance providers will be able to tell you if you can raise finance very quickly and you will have the funds in your account within a matter of days once you have been approved. Alternative finance is often praised for being innovative, all of the options have been designed specifically with business owners in mind and therefore they are very flexible and simple to repay.
If you’re interested in raising business finance via the Merchant Cash Advance or Small Business Loan, please give Capify a call today on 0800 151 0980.