Why It’s Time To Start Thinking About Loan Alternatives

18/08/2014

Accessing Finance

We’re all aware that high street lending is here to stay, but tough times call for us to be a bit creative with how we raise and manage our funds. Businesses are in the same boat.

With traditional sources of finance taking a tougher stance on lending, it can be a real struggle for businesses to secure a quick cash loan. But it’s not all doom and gloom, as more and more business owners are instead choosing alternative funding methods to boost their cash flow.

The message is clear: with limited traditional finance support, companies will turn to other options. There’s now a whole host of specialised alternatives to quick cash loans, ranging from Business Cash Advances to crowd funding and peer-to-peer lending.

Simply put, a business cash advance does exactly what it says on the tin: it provides a cash advance to your business. The idea behind it to help support small businesses in the UK be successful. We’re just doing our bit to help ensure that hard working SME community thrives by having access to the funds it needs.

You might be wondering how a business cash advance works? Well the amount advanced is paid back as an agreed percentage of your daily card takings. Unlike UK cash loans for businesses, there is no monthly fixed sum to repay, so it works nicely in line with your cash flow.

Finding the funding option that feels right for your business will depend on how you operate and how you’d prefer to pay it back. We thought it would be useful to compare the main features of each funding option below, so that you can make an informed decision on which to choose:

Factor Liberis Business cash Advance Bank loans
Repayment Flexibility We only get paid when you get paid.Pay back is a % of debit/credit card sales; so we track income, so repayment amount changes daily A fixed monthly sum withdrawn from the business bank account
Approval rate Over 90% 66% approval rate for SMEs, according to 2012 figures from the Office for Budget Responsibility
Speed Funds available in as little as 24 hours Variable, but can sometimes extend beyond a number of weeks to months
Ease of application Simple application form Application formPresentation of business planProfit and loss accountsBalance sheet and cash flow forecastsMeet with business manager/representative
Suitability Businesses over 4 months old with £4,000 revenues from debit/credit card sales Available to almost any kind of business that can make the appropriate business case (and provide the right paperwork)
Amount available Typically £4,000 – £300k, and up to 100% of a businesses’ monthly card takings Can be higher than a Business Cash Advance(depending upon the bank’s evaluation of your businesses’ prospects)
Time to payback Short term funding option, typically between 1 and 9 months From 12 months to 10 years for more substantial borrowing (more commonly 5 years)
Security None required (so business and personal assets are safe) If security is required, the company’s assets may be at risk if the business defaults on the loan
Reason for money Not a factor in the approval process, so long as the money is designed to help finance the business A major factor in the approval process; the business owner is required to make a case for how the money will be spent
Cost An upfront fee is added to the amount advanced. More expensive as greater risk taken by the lender A fixed or variable rate of interest is applied; the rate depends upon the amount required and whether the quick cash loan is secured or unsecured

 

So who benefits most from a Business Cash Advance?

Seasonal businesses are finding it a huge help. Because you pay back an agreed percentage of card sales, it’s cash-flow friendly during the quieter months. That’s why the hospitality sector has been a keen supporter of this funding option in recent years. It’s also equally handy for retailers who are looking to buy new stock, or hairdressers looking to use their business cash advance to plug a short term funding gap.

The best option for your business will depend upon how much you value a flexible pay back, speed and ease over the more predictable loan process. By using the checklist above, you will be able to decide which method ticks the boxes for you, helping you to achieve greater success within your business.

A Refreshing Alternative to a Loan – Liberis

Securing a quick cash loan for a business can be a long, tiring and drawn out affair. That’s why we’ve said goodbye to anything that’s not business friendly, like penalty charges, late fees and fixed monthly payments. Which means you can concentrate on running a successful business.

Since 2007, we’ve been providing a hassle free loan-alternative for small and medium sized businesses across the UK who require business funding. Our Business Cash Advance requires no collateral and you don’t need a squeaky clean credit record either. Our goal is to boost your cash flow, so you can spend your funds where you see fit; stabilising quiet seasons, expanding, refurbishing and all the other projects you can do to improve your business.

The Liberis Business Cash Advance - Designed to help SMEs
  • Funding from £2.5k to £300k
  • One fixed cost; no APR, varying terms or penalty fees
  • A quick, easy and no hassle onboarding process
  • Higher approval rates than the banks
  • Flexible and painless repayments that support cash flow
  • 80% of customers use us again
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The Association of Alternative Business Finance
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BFA Affiliate
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Registered in England and Wales No: 5654231. Address: Third Floor, Glen House, Glenthorne Road, London, W6 0NG
Liberis is a responsible financial provider. Liberis does not offer 'short-term loans'. The minimum expected duration of a Business Cash Advance is 120 days / 4 months and typical expected durations are 6-12 months. These business financing products are not consumer loans.