It’s been well documented in the media recently that bank lending to small and medium enterprise in the UK has decreased, and the political consensus says that this is bad for the economy as well as the individual businesses affected. Recent figures from Funding Options show that this lack of mainstream funding to SMEs has had catastrophic knock-on effects, and an estimated £2.9bn of revenues have gone unrealised — so the consensus has been proved right.

Luckily, alternative finance is in a much stronger position compared to even a couple of years ago, and many more businesses can find another financing option aside from their bank. But with a market full of complex products and literally hundreds of lenders offering their services, how can small businesses take advantage of AltFi, and use it as a platform for growth? Here are a few ways that alternative finance can be a springboard to increased revenues.

Service new contracts by getting paid early for old ones

For any business that trades on credit, it can be frustrating to wait weeks for an invoice to be paid — and catastrophic if the customer overruns the due date. But help is at hand in the form of invoice finance, which means you can have the money for completed work within days instead of weeks.

With invoice finance, you’re effectively selling invoices to the lender, who’ll advance you up to 90% of its value as soon as you’ve raised it. Once your customer pays, you get the remaining balance minus the lender’s fee — usually as low as 2-4% — so instead of putting your plans on hold while you wait for the money to come in, you can get on with the next contract without worrying about cashflow.

Take your operation global

In the past, firms that wanted to import or export extra stock would need a big reserve of working capital to do it. With trade finance, it’s possible to fund the entire supply chain and get your international plans in motion. The trade financier becomes your partner in the whole process, coming up with the capital in return for a share of the profits — and they can help you secure a better deal too.

For example, if your business got a big order from an international buyer and your manufacture were overseas as well, you’d need to: place the order and perhaps pay a deposit; wait for manufacture to complete; pay the manufacturer; get the goods shipped to the buyer; and then invoice the buyer. All that means you’d be out of pocket for weeks while the goods were made, shipped, and sold — trade finance allows you to get the whole deal done without being in limbo.

Get a loan that you can afford

Traditional term loans from high-street banks are notoriously inflexible, meaning business owners have to have a very close look at their accounts and projections before agreeing an amount to borrow. Even with a detailed look into the future best- and worst-case scenarios, it’s a significant risk to take on. In the unfortunate cases where a business can’t service its debt, there are precious few options other than refinancing — and even that is a difficult thing to contemplate.

In contrast, revenue loans are agreed based on your turnover, and repaid as a proportion of it too. Repayments that go up and down with revenues make it much easier to ride out tough periods, or take advantage of the good times — so a business loan doesn’t have to be quite such an intimidating prospect for vulnerable or unpredictable businesses.

Conclusion

These are just three ways that alternative finance can help you on the path to increasing revenue. There are lots of other products out there to suit individual businesses and situations, with a huge amount of choice and many ways to grow, whatever your sector. Whether you need an expensive piece of kit to ramp up production, or commercial property finance to acquire new premises — AltFi can help.