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Business Funding Without the Banks

How can you get business funding when the bank won’t lend to you? This is a question many businesses are asking, but unfortunately aren’t finding the answer to. While your first port of call might well be the bank, it definitely doesn’t have to be the last. We’re going to run through a few alternative finance options which could help your funding woes.

1) Invoice finance

Invoice finance services such as factoring and invoice discounting effectively free up the money tied up in unpaid customer invoices. You can receive up to 90% of the value of the invoice within 24 hours, with the remaining funds released once customer payment is received, minus a small lending fee. This is a fast, flexible and accessible means to funding and could help you to remedy late payment and cash flow problems.

2) Asset based finance

Asset finance allows you to borrow against the assets owned by your business. Either the lender will buy an asset from you, such as machinery, and then rent it back to you, or you borrow against your asset but are still allowed to use it. These leasing arrangements can help with machinery or equipment costs, and are essentially rental agreements with the finance company.

3) Enterprise Finance Guarantee scheme

This was originally launched by the government in 2009 and is helping small and medium businesses gain access to funding they’d otherwise be unable to reach. The government provides the lender with a guarantee for 75% of the loan, for which the borrower pays a premium, helping businesses who might not be eligible through the banks. The scheme has recently been extended until 2014-15 and is expected to free up another £600 million of lending funds.

4) Export Enterprise Finance Guarantee

If your business is looking to enter new markets abroad or else is already exporting, this scheme is designed to help. It works in a similar way to the Enterprise Finance Guarantee Scheme and provides lenders with a 60% guarantee, helping more businesses get access to a commercial export loan.

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