5 Ways to Obtain Critical Business Finance

For businesses of any size and in any industry, there is nothing more crucial to success than financial stability and reliable cash flows. It might not be the most glamour aspect of enterprise operations but without the right financing being in place then no company can realistically hope to maximise its competiveness.

With that in mind, let’s take a look at 5 ways businesses can currently access finance beyond traditional sources.

1. Crowdfunding and peer-to-peer lending

A growing number and variety of businesses are accessing operational funds through peer-to-peer lending facilities and platforms. The process involves enterprises and investors connecting online in ways designed to be beneficial to both.

Crowdfunding often makes headlines in the context of start-up business scenarios but the industry extends far beyond this sector and is increasingly being used by all manner of small firms in need of extra financial flexibility. 

2. Asset refinancing

This particular form of finance is generally most suited to businesses that have significant amounts of capital tied up in a small number of assets. In these situations, when cash flows become a cause for concern, it’s generally important to find ways of freeing up funds quickly and asset refinancing is a straightforward way of doing so. The process is essentially a means through which a company can sell its assets and then lease them back on the basis of pre-agreed terms.

3. Invoice factoring and discounting

One of the more impacting developments in the realms of alternative finance in recent years has been the growth of invoice factoring and discounting. The process makes it possible for businesses to make use of their sales ledgers by effectively selling their invoices and the rights to the incoming funds. Of course, there are fees involved but if a company needs swift access to upfront cash then that price can be well worth paying.

4. Short-term loans

In the UK and other parts of the world, there has been a notable growth in the number of short-term loan providers emerging over the course of recent years. These services have been made available largely in response to widespread demand resulting from the reluctance of mainstream lenders to offer credit to even the most viable of small to medium-sized businesses. Terms vary on different deals and they can be relatively expensive but when companies find their cash flows being suddenly squeezed then availability is really all that matters.

5. Alternative overdrafts

The retreat of high street banks from the SME lending scene has also had the effect of making alternatives to traditional overdrafts a popular standalone financing product. In this field, facilities such as revolving loans are helping businesses in a variety of sectors to cope with financial ups and downs in much the same way as ordinary bank account overdrafts would once have done. It is worth noting though that these alternative overdrafts are often only available to companies that can demonstrate consistent incomes and a solid trading history.

Doing your homework

The market for alternative finance options is exceptionally dynamic in the UK at present. So for companies worried about their prospects, their operating margins and their bottom lines, it pays to do some homework and to find out exactly what opportunities are available in the context of funding solutions.