With bank lending such a tough prospect for many small businesses, it’s unsurprising that many experts are foreseeing a move away from traditional lending methods. Alternative lenders are starting to take a larger share of the small business lending market, and though the banks might still be the first port of call, nowadays there are far more options than simply loans and overdrafts.
The Bank of England has recently highlighted all the options available for business – these will be essential in the face of ongoing economic struggles and the predicted lending gap of many millions of pounds that is set to open up over the next five years.
Vital to these new lending methods is the internet, which is making it easier for small businesses to access a multitude of lending options. Peer to peer lending, asset based finance and crowd funding are all options that are being opened up, giving businesses the ability to get access to the funds that they need – without having to rely on the big banks to supply it.
Invoice finance is one such funding method that’s been earmarked as playing a key role for UK businesses in the months and years to come. Where once this might have been considered a last resort, invoice finance is now being seen by both experts and the government itself as a way for businesses to access the funds that they need.
Factoring and invoice discounting are key ways for businesses to inject cash flow into their business without taking on any new debt. Businesses can unlock the cash tied up in unpaid customer invoices, allowing them to get the money without having to wait for days or even months for payment. Late payment can drain any business – especially when there’s not a lot of breathing room. Invoice finance is one way to prevent this.