What are my options if my bank has refused my company finance?

Alternative commercial finance options for your business

When looking for funding to kick start or grow your company, many business owners’ first instinct is to turn to their bank in order to secure this borrowing. Unfortunately, the majority of high street banks have an incredibly tough lending criteria which often leaves those most in need of an injection of capital – such as start-ups or those without a proven track-record of successful trading – unable to access these funds directly from their bank. While this can undoubtedly be frustrating, the good news is that you are not restricted to just your bank when it comes to securing funding for your business. There are now more ways than ever for you to source this borrowing, many of which offer much more flexibility than a standard high-street bank loan. So, if your bank has refused your company finance, here are some alternative options you may wish to consider:

• Business Loan – Banks are not your only option when looking to secure a loan for a business loan. Many lenders outside the traditional high street names now offer this type of borrowing, and quite often their lending criteria is much more flexible and sensitive to the reality of running a business. With any type of business loan, you should expect to provide a personal guarantee to underpin the lending, which will make you personally liable for paying the loan should your company be unable to do so, such as in the event of the company becoming insolvent and entering into a liquidation procedure.

• Invoice Finance – Invoice finance is an alternative to a traditional business loan, which can provide a level of certainty and security to your company’s cash flow. Invoice finance works by giving you immediate access to the money you have tied up in unpaid client invoices. With invoice finance, you can draw down an agreed percentage of this money immediately, and continue to do this each time you issue an invoice. If your company is at the mercy of late-payers, invoice finance could be the ideal solution. The product is truly scalable, meaning the credit available will grow as your company grows without you needing to reapply for additional funds.

• Asset Finance – If you are looking to secure a bank loan in order to fund a large purchase for your business, such as a vehicle, piece of machinery, or any other significant asset, you may be better financing this through a specialist asset-based lending option. You will typically be required to put down a deposit for the equipment you are buying, with the rest of the balance being spread over a series of monthly payments. At the end of the term, you will typically have the option to purchase the asset outright, or trade it in for a newer or upgraded model.

• Angel Investment – A typical Angel Investor is an entrepreneur or another individual with extensive business experience. They seek to invest not only their money, but also their knowledge and experience, in up and coming businesses they believe have the ability to grow and flourish. In order to secure Angel Investment, you will need to be able to demonstrate your company’s potential as well as being clear in your needs for the funding you are seeking. For those companies in their infancy, Angel Investment can be instrumental in propelling the business forward, thanks to a combination of the money and knowledge provided by the Angel.

If you have been refused finance by your bank, and would like to discuss alternative ways of financing your business, the experts at UK Business Finance are here to help. Using our industry knowledge and close working relationships with a whole host of lenders, we can scour the market to identify the most appropriate funding facility for your company, before working to secure you the very best deal possible. Contact our team today for immediate help and advice.