In Ireland the main banks provide most business loans whereas in the USA non-bank lenders do the most. It’s a trend that’s moving more in the direction of alternative finance every year. Banks have strengths in certain areas and are good at what they do. Non-banks fill the void for newer ways of doing business, for example, fintechs can build systems quicker using different data such as merchant account information. That could be from e-Commerce payments such as Stripe or brick-and-mortar shop’s card payments. Banks are somtimes slower to keep up with changes or just happy to focus on core business.
Top 5 reasons to use alternative business finance
Bank taking too long. Our lending partners can offer same day approval and most of the time act quicker than banks. Many CFOs start working on bank applications months in advance of a forecasted need. However, business owners are often putting out fires and need to plug holes in cash flow as they arise; alternative finance can be more accommodating.
Bank requesting too much information. Our lending partners can often approve loans with two documents: accounts & bank statements. Business owners we help have often been frustrated by bank requests for reams of documents including draft accounts, business plans, cash flow forecasts, schedules of debt, aged creditors & debtors files and more. Key concerns are expense and availability of their accountant to produce the information in a timely manner.
They have some missed payments. Our lending partners can be more forgiving than banks when business owners have left finance applications too late with resultant bounced direct debits and referral charges showing in the bank statements. There are a wider variety of non-bank lenders with different risk thresholds who may quote.
They have a seasonal business. Most banks focus on term loans that have regular repayments over a fixed period but what if you have a seasonal business with limited cash flow at certain times of the year? For example, a hotel in the West with a busy summer and quiet winter, it can be challengng to get banks on board on term loan products. Alternative lenders can use merchant account based lending with a flexible repayment that is more in tune with this business’s cash flow cycle.
They neeed more than they were quoted. Banks may only see so much room for credit and this might not achieve the amount the business owner needs. In these cases there may be alternative lenders who can step in, whether that’s unsecured lending or specialist asset based lending.
Does your business have a plan to grow in 2023 that requires financing? Call the Business Loans team on 01 55 636 55 for fast finance quotes or email hello@businessloans.ie.