Everything You Need To Know
Access To Funding The Business Finance Sector
As an SME, you are probably already well acquainted with the financial woes of a start-up entrepreneur. Unfortunately, High Street banks do not dole out business bank loans too easily and that often leaves budding entrepreneurs – such as yourself - with a fantastic idea and seemingly no way to fund it. Fortunately, there are various alternatives to bank loans available for you to choose from. And it seems as if alternative finance is here to stay!
It can be easy to take it personally when a High Street bank rejects your loan application. Unfortunately, banks do not have a high approval rate in the first place - the reality is that they are tied to a strict set of rules and regulations that dictate what type of financial scenarios and business propositions are deemed ‘worthy’ of loans. It is all about ensuring that the bank never puts itself at too much risk.
It makes sense then that if your business idea and current financial situation poses any sort of risk to the bank itself, your application will be rejected. If it just so happens that your loan application has been denied, pick yourself up, dust yourself off, and start considering the various alternative loans available to you.
You could also completely avoid putting yourself through the red tape associated with High Street bank loans and jump right ahead to applying for an SME loan or merchant cash advance.
Why It’s Difficult To Get A Bank Loan As An SME
Below are a few reasons why banks end up rejecting a number of small business bank loans applications. Chances are you’ll be rejected if:
- Your affordability assessment shows that your income will not support your current expenses plus additional loans.
- The bank lacks faith in, or understanding of, your business concept.
- Your business plan and projections are not sufficient to base a solid, risk-free decision on.
- You have a poor credit score or no credit history to reference.
- You currently have several loans and excess debt in your name.
- You have not been employed in a stable position for a suitable length of time.
Banks Vs. Online Lenders What Are The Options?
When you receive a rejection from the local High Street bank, you might start to feel panicked. Perhaps you already feel disheartened because you feel like applying with a High Street bank will be a futile experience, before you have even tried. Either way, rest assured that there are several alternatives to bank loans for you to consider. The High Street bank is certainly not your only SME funding option!
Some entrepreneurs opt for applying for a credit card with low APR. While this can help cover some of the business start-up costs, remember that some credit cards come with limits in terms of how much you can withdraw in cash – so this could hinder your business start-up processes from the get-go.
Other popular alternatives include seeking out investors (usually people who invest money into your business in return for shares) and borrowing from family and friends – which poses the risk of getting messy when mixing business with pleasure.
It’s an undeniable fact that the alternatives to bank loans with the least amount of hassles and strings attached are provided by specialist loans companies and brokerages offering alternative funding products. The merchant cash advance and unsecured business loan are right up there with the “best” options.
In actual fact a cash advance is not a loan; it's an advance on the money your business is predicted to generate in credit card and debit card transactions. Your business will receive an instant cash injection, which you then repay simply, using a small pre-agreed percentage of your future customer card sales. Better still, if business is slow, the amount you repay is also nicely reduced, so repayments will always be suitably in sync with your business' cash flow.
An unsecured business loan is a loan given to a borrower on an unsecured basis. Because the loan is unsecured, you don’t have to worry about putting up any valuable business collateral as security for the loan. Instead, a lender may ask for a personal guarantee. This personal guarantee is a legally binding document that agrees if your business defaults on loan repayments, you the business owner become personally liable for making the repayments with interest.
What Sets SME Loans Apart From Traditional Business Bank Loans?
As mentioned previously, traditional banks strict lending criteria makes in near impossible for young, growing businesses to access the funding they need to continue to succeed. By applying through SME Loans you can still be approved even if your credit score is less than perfect. We offer funding for all business types, including those with bad credit. Just because you have made financial faux pas’ in the past, it doesn’t mean that you have to continue to pay for it forever (or be punished by having your business ideas and dreams put on hold).
What gives specialist business loan companies like ours the competitive edge is that we work with our customers and can envision their business dreams with them. Instead of looking for reasons to reject an applicant, our dedicated account managers work hard to match them to lenders and loans they can realistically afford.
SME Loans Funding Solution Applying For Alternative Finance
While the local bank will offer you options and process your application with strict scrutiny, SME loans will pair you with viable alternative funding lenders who are most likely to approve your loan. The options on offer are flexible and a loan package can be tailor-made according to your business' specific financial situation and needs.
Here is what we can offer your business:
- Business Loans between £1,000 and £500,000
- Merchant Cash Advance between £5,000 and £500,000
- 1 page online application that takes just minutes to complete
- Fast pay-out of funds to your bank account in as little as 24 hours
- Repayment plans tailored to your business, over 1 - 5 years
- No collateral required for our funding options
Who Can Apply for Alternatives to Bank Loans?
Are you eligible to apply for bank loan alternatives in the UK? Businesses that are registered in the UK and have been trading for over 6 months, with an average monthly turnover of approximately £ 5 000, are eligible to apply for a loan or merchant cash advance with SME loans. If you want to improve your chances when applying for alternative finance, check out our managing cash flow guide.
SME Loans cannot offer loans to businesses that operate in the following fields: drugs, gambling, and weapons, manufacturing of chemicals, pornography, and banking/money transfer services.
Quick & Easy Application Process for Alternative Funding
As far as alternatives to bank loans go, loan applications at SME loans tend to be the simplest option out there. No business owner wants to wait weeks for feedback on a loan approval. At SME Loans, we won’t keep you waiting.
Follow these easy steps to apply for alternative funding with us:
Click on the application page. To ensure we match you with the best lender, we will ask for more information about your business. Please be ready to tell us:
- Your business' name
- The number of years you’ve been in business
- Your average monthly card sales
- The amount you are looking to borrow
You will then be directed to the next step, where you will be required to disclose:
- Your title, first name and surname
- Your position in the business
- Your email and telephone number
Click to accept the terms and conditions and click ‘get my quote’. From here your application will be processed and reviewed by one of our approved business finance suppliers.
One of our account managers will be in touch by phone or email to discuss the terms of your loan or advance agreement.
After carefully reading through the terms of agreement, please sign the relevant documentation and return to the lender. You will then be able to access the funds in your account in just 24 hours.
Don’t Delay – Apply Today
While our loans are quick and easy to apply for, it is important to ensure that you are not requesting more cash than you actually need. It is important to give your business time to grow without over-indebting it. At SME Loans, we believe that our alternatives to bank loans offer you the opportunity for exactly that. To get the funding you need for your business, apply for a business loan or merchant cash advance today.
Alternatives to bank loans FAQs Frequently Asked Questions
Still unsure about alternatives to bank loans? Then have a look at our FAQs where we've tried to answer your questions.
What are the alternatives to bank loans?
Highstreet bank loans are notoriously difficult to be accepted for, especially for startups. However, there are alternatives to bank loans:
- Merchant Cash Advance
- Unsecured Business Loans
- Secured Business Loans Often these are provided by private lenders.
How can I get alternative financing?
Alternatives to bank loans are offered by brokers and lenders who are able to offer alternative financing to SMEs and startups. You can apply online by completing an online application form. You will have to provide some basic details about your businesses such as monthly turnover and for how long you have been trading and how much you want to borrow.
You will also need to disclose some personal details and contact information in order to be deemed eligible for a loan. Finally upon acceptance, you will be contacted by a broker to discuss the terms of your loan and queries you may have.
Why should I choose SME Loans as my alternative to bank loans?
Based on our experience of helping businesses find finance, we understand that alternatives to bank loans can be a powerful helping hand to SMEs and startups. The panel of regulated lenders we work with are able to offer a variety of alternatives to finance at a competitive rate, to make sure you get a good deal.