Why more and more businesses are considering alternatives to business bank loans

  Published: 14th August 2019

Years ago, if you wanted to start a new business or required funds to support or expand an existing one you went to the bank.  Other than investing your own funds or seeking investment from family or friends a bank loan was the main source of funding for businesses.


Traditional bank loans are now just one of a whole host of available options. The economic crisis and subsequent tightening of lending criteria made borrowing form the banks more difficult. This situation led entrepreneurs and business people to think differently about raising capital for businesses.


Asset finance, invoice financing, crowd funding, angel investors, venture capitalists and peer to peer lending have all become popular alternatives to a traditional bank loan.  Government grants and subsidies are also another avenue for managers and businesses owners to explore.


Alternative sources of business finance such as invoice financing and asset-based lending offer a number of benefits over traditional bank loans.  These forms of business financing are growing in popularity for numerous reasons.


Firstly, securing finance for your business this way is often more straightforward than securing a loan through the bank.  The lending criteria is simpler and the application process quicker.  Access to funds can happen quickly and this is huge advantage for many businesses.  Particularly those who require a solution quickly.


Invoice financing and invoice discounting offer a flexible approach to securing funds and improving cashflow within a business during its early stages as well as in more established businesses.  There is no long-term loan agreement and because this form of financing is based on cash tied up in an invoice rather than a loan it doesn’t impact a on the credit rating of a business.


If you are looking for alternative ways to invest in your business or improve you cashflow and feel a traditional loan isn’t quite what you are looking for then speak to one of the team at Zodeq.  We would be happy to talk through options and the service we offer.