Which Option is Right for Your Business?
Let’s break down some of the most popular alternative funding options and how they work.
1. Peer-to-Peer Lending (P2P)
Peer-to-peer lending connects businesses directly with investors who are willing to lend money. It’s a straightforward process: businesses apply via an online platform, investors fund the loans, and repayments are made with interest. This can be a great way to secure funding without the hurdles of a traditional bank loan.
2. Invoice Financing
If your business is waiting on unpaid invoices, invoice financing allows you to access a percentage of the money owed to you upfront. This keeps cash flow steady and helps you avoid delays caused by slow-paying customers.
3. Asset-Based Lending
This option lets businesses borrow money against valuable assets like property, equipment, or stock. It’s particularly useful for businesses that own high-value assets but don’t have strong cash flow.
4. Bridging Loans
Bridging finance is a short-term loan that helps businesses complete property purchases or cover gaps between transactions. It’s commonly used by property developers who need immediate funds while waiting for long-term financing to be arranged.
5. Private Investors & Venture Capital
Private investors and venture capital firms provide funding in exchange for a share of the business. While this means giving up some ownership, it can also provide valuable expertise and networking opportunities.
How to choose the right funding option
The best funding option depends on your business’s needs:
- Need quick cash flow? Invoice financing could be the answer.
- Have valuable assets? Asset-based lending might work for you.
- Looking to scale? Venture capital could provide the funding and support you need.
The world of business finance is changing, and alternative lenders are opening up new opportunities for businesses that don’t fit the traditional lending model. Exploring these options could be the key to securing the finance you need—without the usual roadblocks.
