Over the last five years alternative business finance has grown and become a viable mainstream ‘go-to’ business funding product. Take for example Invoice finance. Invoice finance is for businesses that bill other businesses so it falls into the category of b2b business finance. Many see invoice finance as an alternative funding product. In a way it is. It offers a different way to those businesses who look to raise finance via the high street bank.
It works well for those businesses that find that their customers don’t pay on time, who push their credit terms to the limit. It also works for businesses who need faster access to the funds tied up in unpaid invoices. The funds can be released usually when an invoice is raised which is certainly great for cashflow purposes.
For businesses that bill the customer (b2c) this clearly isn’t an option. If your customers pay you via credit or debit card you can apply for a business cash advance. This works well in that it works in line with your business cashflow. When you’re having a poor month on sales then you will repay in line with lower sales. This way it doesn’t pressure your business as you pay back in line with those sales.
Crowdfunding is another option for businesses but this tends to lend itself to businesses who are launching a project, product, service or even starting a business. The idea is put to a community of investors who each invest an amount of money into the proposal until the limit is met.
Crowdfunding has lead to many new startup enterprises and project ventures over the last five years. It has offered finance in an innovative way. The government’s British Business Bank has invested an enormous amount of money into the alternative finance space – both crowdfunding and merchant cash advance lending.
So if you are unsure to any of these products it’s good to know that the UK government is backing the alternative finance space as a true option to high street banking.