Alternative finance doesn’t just boost SMEs’ coffers

As the economy looks more and more uncertain alternative finance is becoming rather mainstream in Britain – and these situations make the most of it

Alternative finance doesn’t just boost SMEs’ coffers

There are many options for SMEs looking to achieve that next step in their growth. But whether utilising technology, capitalising on the online marketplace or nurturing a new client base, nearly all require financial investment. And it’s difficult to see which borrowing avenues will bring the desired results.

Many big banks have tightened their lending criteria recently, making it tough for small business owners to know which way to turn. In fact, according to the British Business Bank more than seven in ten small businesses would now avoid external finance even if it meant they wouldn’t expand. 

Thankfully, that’s where alternative finance providers come in. By offering a range of financial products more accessible than traditional bank loans but still giving small business much-needed cash injections, SMEs are getting more opportunities to grow and thrive than ever before.

For example, you’ll undoubtedly have encountered one of these situations that screams for alternative finance.

In bloom

With summer fast-approaching, there’s no better time to capitalise on new opportunities and markets to revitalise your small business. And regardless of your niche, industry or sector, you have more avenues available than you might realise. 

For example, at this time of year Capify, the financial planner, comes into contact with many businesses in the hospitality sector who want to focus on their outdoor areas. Whether it’s a beer garden or outdoor eating space, it’s wise to spend some money sprucing up the al fresco.

Of course, most businesses only need this funding boost while the weather’s scorching. With fewer barriers alternative finance can accommodate for such flexibility without the hangover many traditional long-term finance options offer. 

Three birds with one stone

The mid-year point is always a great time to identify the key components of your business and what your priorities are. Whether it’s your online visibility or presence in the local community, these focuses will help you identify and prioritise your actions for the upcoming year. However, whatever your goals the next step of business growth will lie behind a considerable investment – be it in time, energy, finance or all three.

From its experience Capify finds SMEs use alternative funding for more than just finance. By providing the much-needed dough without labyrinthian bureaucracy small businesses see their flexibility and cash flow dramatically improve, freeing them up for just about any growth ambition.

One’s loss is another’s gain

Every year another retail giant goes into administration or voluntary arrangement and closes its doors. It sounds bleak but it actually gives smaller retailers opportunities to keep Britain’s high-streets interesting.

For instance, many use a Merchant Cash Advance to purchase seasonal stock and keep their offering fresh. This sees them adapt to changes and demands far more quickly than large corporate businesses, helped by their lean structures and fewer employees and overheads. 

This kind of alternative finance means small retailers can upgrade to larger premises much more flexibly to grow over a shorter period of time.

According to the Cambridge Centre for Alternative finance, the value of alternative finance grew 35% to £6.2bn in 2017. The importance of entrepreneurship to the UK’s economy is beyond doubt and while many SMEs remain unsure of what the future holds for them, it’s important to remember there is always help available.

This article comes courtesy of Capify, the financial planner

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