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5 Advantages of Non-Bank Business Finance Options

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Sometimes finance is what it takes to help businesses get off the ground. Whether funding is needed for marketing, advertising, manufacturing or equipment, finance is often key to success. It can be a case of putting money in to get money out.

So businesses that don’t have the money to invest initially need a little help. That’s where business finance comes in.

Banks are usually the first port of call for businesses looking for finance, but more and more small and medium businesses turn to alternative finance providers.

So what exactly is drawing businesses away from traditional bank loans and towards alternative business finance solutions? Here are five advantages of non-bank business financing.

1: The Application Process Is Much Simpler

Bank loan applications can take months. You have to jump through hoops and fill out endless paperwork. But non-bank business finance providers usually have simple application processes, so it’s no wonder people are turning away from bank loans.

Most alternative finance applications involve a few simple forms, which can be filled out online. As a result, there are no unnecessary appointments or endless letters back and forth. Instead, communication can be done over the phone – or in some cases – through email.

2: Credit Requirements Are More Relaxed

Bank loans often focus on your credit score and will rarely lend to new businesses without several years of accounts. But the eligibility criteria is much less strict with alternative providers. They take into account more than just your credit score, and applications are often reviewed on a case by case basis.

Many providers specialise in providing finance to those with subpar credit scores or new businesses without an extensive financial history.

Because non-bank business finance is generally easier to qualify for, alternative finance providers give more people the chance to succeed on their own terms.

3: Get Fast Access to Funds

Previously, it’s always been the norm for business finance to take weeks, or sometimes even months, to come through. But alternative providers are usually much quicker. Your application will be reviewed pretty much straight away, and if you’re approved for finance, you’ll have access to it in a matter of days.

So if you need business finance – and you want it as soon as possible – non-bank financing is the way to go.

4: You Decide How To Spend Your Funds

Banks often lay out strict rules for how loans should be spent, especially for small businesses and start-ups. But by going with an alternative provider, you’ll usually have the freedom to use the finance how you see fit. The funds are for you to grow your business — how you go about that is up to you.

It’s worth bearing in mind, though, that some types of finance may require you to use the funds in a certain way. For example, if you apply for order financing, you’ll need to use the money to fund orders. So it’s worth thinking about what type of funding you’re after: a standard business loan or a specific financial package based on your company needs.

5: Non-Bank Business Finance Is Often More Flexible

While banks are quite rigid with the types of finance they offer and how loans are repaid, alternative providers offer more flexible solutions.

Non-bank business finance often has the option of extended repayment periods, so the monthly repayment is more manageable. This not only makes business finance easy to manage, but it also improves cash flow – which is going to help make your business more financially stable.

Non-bank lenders can also be more flexible regarding what type of finance product they offer you. From supplier finance to sales finance, there are different options to choose from if you need to finance a particular business process. Some lenders will even allow you to combine types of business finance to create a “hybrid” finance solution.