Finance options as a small business owner can be challenging, especially when you’re focused on growing your enterprise. While traditional bank loans can help, they often come with drawbacks such as strict eligibility criteria, lengthy application processes and the need for collateral. Instead, there are alternative business lending options designed to support small businesses and help them thrive. In this article, we explore these options to ensure your enterprise has the flexibility and resources it needs to grow.
What are the drawbacks to traditional bank loans for businesses?
Traditional bank loans often come with strict eligibility criteria, lengthy application processes, and may not meet ongoing cash flow needs. Banks tend to prefer lending to established businesses with strong credit histories, leaving startups and smaller businesses at a disadvantage. Additionally, the requirement for collateral can pose risks, especially for those with limited assets.
Instead of relying on a traditional High Street bank loan, consider alternative business funding options available for small businesses. White Oak UK offers a range of business funding products designed to support and grow your enterprise.
Here are some alternative business lending options that can help your business thrive.
Working Capital Business Loans
If your small business needs quick access to capital, a working capital loan allows you to secure funds without giving up equity in your enterprise. This business loan can cover various expenses, from recruitment and annual subscriptions to licenses and corporation tax costs. It’s particularly useful for managing cash flow during financial difficulties, which often arise in seasonal businesses.
Asset Finance
Asset finance is another short-term loan alternative to traditional bank loans, designed to finance essential assets and infrastructure for your business. Whether you need the latest equipment through leasing or are financing a fleet of electric vehicles, asset finance can help.
Remember, the asset you acquire through this loan is secured against the loan itself, and failure to keep up with repayments could result in losing those assets. Always stay on top of your repayment schedule when using asset finance.
Invoice Finance Loans
Invoice finance offers a simpler process than traditional bank loans, allowing you to release funds tied up in invoices. This alternative funding option improves cash flow and helps you raise finance for crucial assets without creating debt, eliminating the need for monthly loan repayments.
Unsecured Business Loans
Unsecured loans provide quick funding without requiring assets as collateral. This option is excellent for small business owners who need fast access to funds. However, these loans come with higher risks for lenders, which means smaller loan amounts, higher interest rates, and shorter repayment periods.
Successfully repaying an unsecured loan can help build a good credit history, increasing your chances of borrowing more in the future.
Numerous finance options exist for small businesses that don’t require traditional bank loans. Choosing the right one can help your enterprise continue to grow in its sector.
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