SMEs (small and medium-sized enterprises) hold up much of our UK economy. Sources show that in 2019 – despite the economic uncertainty that we saw at this time – 5.9 million SMEs were operating in the UK. Whilst a lot of these businesses may be thriving, some need help when it comes to optimising their cash flow. This is where alternative financing comes in. At Tower Leasing we decided to create this blog post on how alternative finance can be used to support an SME’s cash flow.
What is alternative finance?
Ever since the financial crisis in 2008, alternative points of gaining finance have been springing up everywhere. They were created – as it says on the tin – to act as an alternative primarily to bank loans. The process of applying for a bank loan can often be long and drawn out, leaving some SMEs high and dry until the paperwork finally goes through. Alternative finance is a way in which this waiting time is cut short, keeping SMEs on track.
How is alternative finance different to a bank loan?
You may be wondering how alternative finance can be different to a bank loan. The answer is that policies such as Merchant Loans aim to be much more flexible than a bank loan. It operates differently, as you repay this type of loan by lifting a small percentage of your credit/debit card transactions and sending this back to your source of alternative finance.
In a world that sees more and more transactions done by card each day, this is an easier way for SMEs such as shops, restaurants, and bars, etc, to pay back their loans without hassle or stress. It effectively measures the peaks and troughs of ordinary business life, meaning that you only pay meaningful sums back when you’re profiting, rather than owing large sums of money when your cash flow is limited.
For more information on how alternative financing can support an SME’s cash flow, feel free to contact our team at Tower Leasing.
Alternative financing – where to find out more
Read about the different forms of alternative financing here – or if you’d like some help to support your business’ cash flow, get in touch with us today.