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How alternative finance can support SMEs across the UK

4 Mins

There’s no question that SME businesses are the backbone of the UK economy, driving sustainable growth and providing a wide range of job opportunities for people with a range of professionalisms.

Despite the economic uncertainty of 2019, at the end of the year, there were 5.9 million SMEs in the UK. Who were employing over 27 million people and generating an annual output of £1.9 trillion. A stat which reinforces how vital this market and the people behind those businesses are as a driver of economic growth. 

Happy days

But it feels like there’s a sense of renewed optimism already in 2020. With the general election out of the way and a promise from the government to reduce business rates for more than 400,000 shops, pubs and restaurants from April, could it be that the tide is beginning to turn? 

With momentum starting to build and some encouraging commitments from the new government, it’s never been more important to ensure that SMEs are given the right support to deliver on their growth plans. Whether business owners are looking to invest in their teams; expand their premises or boost cashflow, having access to the right type of finance is often essential to help them achieve their goals. 

Making the case for alternative finance

The process of acquiring a business loan with a traditional bank can be complex and time-consuming and following the financial crash of 2008, alternative lenders like Capify began offering viable new solutions to help entrepreneurs push their businesses forward.

Alternative lending in the UK has continued to grow in popularity ever since and we’re seeing increased demand from business owners that want finance to help them take their businesses to the next level. We’ve completed thousands of transactions for UK SMEs seeking working capital for their business, delivering many £millions in business loans and merchant cash advances.

As business owners look to obtain finance for working capital, expansion or even to take advantage of an opportunity, we have found that both our flexible business loan and our Cash Advance products have become very popular.   

Try a different type of loan…

The Cash Advance sometimes called a Merchant Cash Advance is a very different proposition to the normal business loan and quite unique in the market. 

This source of finance is aimed to give a business owner the ultimate flexibility and simplicity of taking a loan and is tailored to the performance of their business. It works by taking a small percentage of credit and debit card takings each day as repayments; it is effectively aligned to the peaks and troughs of each individual business and its cashflow. A slow trade day means less is paid back, while on busier days it’s slightly more. 

We tend to find that the Merchant Cash Advance is ideal for retailers, pubs, bars restaurants and eCommerce – businesses that accept credit and debit card payments from their customers – with business owners able to raise up to £500,000 quite easily.

This product has helped differentiate us from other alternatives lenders in our space over the years and it continues to be an attractive source of finance for businesses. In this uncertain economic climate, flexibility and control is what SMEs want from their finance lender, and if 2020 is the year that we do finally start to see business confidence soar, we’ll be ready for it.

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