Gone are the days of going cap in hand to the business banker clutching armfuls of finger in the air financial projections produced, at cost, by your accountant.  Gone also are the days of waiting interminable amounts of time jumping through endless banking hoops whilst our “local” banker presents funding cases to far flung decision makers.  Gone are the days of being forced to proffer more and more personal security to support the funding requests of a growing company.

With the SME denied the help of traditional banks, largely due to the outcome of the 2008 crash and the impact of the Basle Accords on bank liquidity ratios, but with demand for vital sources of working capital still there, the number of alternative finance providers ready to plug funding gaps has grown apace.

Businesses come in all shapes, sizes and hues and, as a consequence, every business has its own unique funding requirements.  Alternative finance providers have emerged to focus on specific segments within the SME funding mix.  This is great news for the SME exploring its funding options, but the myriad of potential solutions does create its own challenges and the plethora of new players delivering multiple options can make it somewhat overwhelming for the uninitiated to tread a well planned path through the maze of new finance providers.

In an unstable economic climate banks are less likely to lend – especially to risky business investments. In today’s unpredictable financial market, it is becoming more and more difficult to get approved for a bank loan, which is why the trend for alternative finance solutions keeps on growing. Without these alternative funding options, many businesses would have ceased trading or would-be successful property investors wouldn’t have been able to buy a second property.

In 2014, a record £1.74 billion was raised through alternative finance models. So isn’t it time you found out more about it?

Advantages of Alternative Finance

Many alternative finance solutions are ideal for SMEs or start-ups, not just because they will struggle to receive traditional funding, but because they can also benefit from better terms.

• Ease of application
• More chance of guaranteed acceptance
• Flexible funding and repayment options
• More favourable terms for the business

Read on for a comprehensive guide of the commercial finance services available.

Types of Alternative Finance

There are many different variations of alternative finance, and it’s crucial to choose the right model for your business. There’s also hundreds of different platforms to apply for alternative finance depending on which specialist funding you choose. Some brokers will specialise in all types of alternative finance. Here is a basic rundown of some of the most popular alternative finance solutions.

Business loans

Whether you need a short term cash injection to cover the costs of staff wages and stock, or you’re investing in a new business premises, a business loan could help. An alternative finance provider can raise finance for business owners without the traditional application process at the bank which can take weeks to approve.

Bridging finance

Need to raise some capital at short notice? With bridging finance you can have the cash in your bank at very short notice, to buy a property at auction or solve your cash flow problems before a large payment is to be made. Bridging loans can be up to £20 million but need to be repaid within 12 months so this is a short term option.

Invoice finance & invoice trading

Many SMEs have a cash flow problem because invoices take too long to be paid and there are constant outgoings to pay. With the help of invoice finance, businesses can release the cash straight away to be used elsewhere and keep money running through the organisation. This type of finance is fairly low risk because you won’t be borrowing any more money than you’ll have coming in.

The time when a company was obliged to hand over the whole of its debtor book to a factor or invoice discounter is long gone as is the time of restrictive contracts from which it is prohibitively expensive to escape.  For companies trading on credit terms with their customers, it is now possible to sell invoices on in a selective manner, entirely at the SME’s discretion, to a pool of individuals or institutions again through a funding platform. Funds are then received immediately to a pre defined percentage of the invoice’s value with the balance less fees being received at invoice collection delivering instant cashflow from working capital tied up in unpaid invoices.  Structures also exist that enable 2 or 3 year loan arrangements, either fully amortising or bullet repayment, driven by the value of the SME’s debtor book.

Peer to peer lending & crowdfunding

Peer to peer lending is an attractive alternative finance solution for commercial borrowers. In most cases you’ll receive a better interest rate and it works the same as a traditional loan – the only difference is you’re lending from individual investors rather than a financial institution. Banks aren’t the only financial institutions with large sums of money to lend. Wealthy individuals can be matched with small businesses to offer an alternative source of funding with more flexible terms.

Debt transactions between individuals and/or institutions facilitated by a platform.  Many individual contributors make up the sum ultimately borrowed with terms between 6 months and 5 years typical. Interest rates can vary from as low as 9% or as high as 18-20%, dependent on the quality of the proposal.  Funds can be delivered in a matter of a week or so in some instances with potentially very little in the way of business plans/budgets being required.  With many platforms in the market, it is essential to work with a platform that will accept the credit risk of your business and present your funding proposal to potential lenders.  If going down this route, do your homework as the character of each platform is very different…

As implied, the sale of a proportion of your business to a number of individual and/or institutional investors in return for investment.  Again, there are a number of platforms who facilitate these types of transaction and they each are different in nature and what type of deal they are looking to propose to their investor base.

Asset finance

There are many different types of asset finance, and this solution works well for industries such as farming where businesses have expensive equipment to purchase and maintain. Business owners can free up cash in their assets to use elsewhere, or spread the cost of machinery over a length of time. Secure a comfortable loan by lending against company assets such as machinery, vehicles or equipment. It is a way to release cash tied up in business assets for you to use elsewhere.

Pension Led Funding

A good pension is a valuable asset which can be used to secure an alternative business loan. Mechanisms which allow SME owners to use their pension funds to invest in their own businesses within a HMRC approved and potentially tax efficient environment.

Merchant Cash Advance

Take card payments as part of your sales? If so, you could benefit from a merchant cash advance. This is an innovative funding solution which is related to your monthly turnover in card payments. You repay the funder through a percentage of your daily card receipts so it a short term solution reducing the chance of long term debt.

Interested in the benefits of alternative finance solutions but not sure which lending option is right for your business? Well you’ve come to the right place. Here at Genie Lending we specialise in a variety of alternative finance options which can be tailored to your business needs. From short term and long term loans, secured and unsecured business loans to commercial and buy to let mortgages, we’re guaranteed to have a suitable option.

Updated: May 2018

The post A Guide to Commercial Alternative Finance appeared first on Genie Lending: Business Loan Alternative Finance Specialists.

So without the help of a bank loan, how can a start-up get off the ground? Start-up finance is a niche and can be a difficult uphill struggle, but there are a range of investment options to explore as a new business. Securing the funding is a vital step to launching your business idea – here are some ways to finance a start-up business.

Government backed loan

Believe it or not, the government has noticed how difficult it is for start-ups to be approved for finance, and has launched some initiatives to keep new businesses forming. A government-backed start up loan lets you borrow up to £25,000 at a low interest rate, while offering free business support. You might also be eligible for local funding depending on your location and the type of business you plan to launch.

Alternative finance solutions

A traditional loan isn’t the only way start-ups can access finance. Thanks to the rise in alternative finance solutions, businesses can apply for peer to peer lending and other specific products which can be tailored to fir each individual business. Of course, start-ups can also take their idea to the worldwide web on platforms such as Kickstarter, or search for angel investors. If you’re determined enough, you’ll find a provider or investor to approve your finance.

Business overdraft

If you don’t need a large sum of money to get the business started, it might be worthwhile using a bank overdraft. However it’s always important to work out how much you will be charged for using the overdraft facility, and how long you’ll rely on it before turning a profit. Overdrafts are put in place for short term lending, and can be very expensive if you stay in the red for a long period of time.

Borrowing cash as a start-up is risky business, but be persistent and you should be able to secure finance from somewhere, or someone. If you need help exploring the options give the Genie Lending finance experts a call.

The post How to Finance a Start-up Business appeared first on Genie Lending: Business Loan Alternative Finance Specialists.

The conventional banking system simply isn’t working for most of us. Without alternative finance providers offering solutions such as peer-to-peer lending, crowdfunding and asset finance, most businesses wouldn’t be here today. These alternative finance specialists are plugging the gap the banks can’t fill, and giving a boost to the economy.

The problem with banks

Why is it so much harder to get a business loan from the high street these days? Financial crashes and economic uncertainty has led to most traditional banks being extremely cautious about lending. The terms on which businesses can secure credit from financial institutions are becoming increasingly unfavourable, so only the biggest and most established companies are approved. This creates a huge problem for start-ups and SMEs, who can’t get their businesses off the ground without a cash injection from the beginning.

In addition, lending from the big banks is also very expensive. The cost of borrowing – if you actually pass the application stage – could make it difficult to repay in the future.

The Alternative Finance option

Thankfully, if you’ve been rejected by traditional financial institutions then there is a way to beat the banks. There are now a wide range of funding sources to explore, allowing entrepreneurs to finance their great ideas. While the banks have been busy failing to give credit to small businesses, private investors and finance experts have seized the opportunity to offer alternative finance solutions. You can lend the same amount of money as you would from a bank using these different methods.

P2P/ Crowdfunding

Peer to peer lending is basically borrowing money off individual investors rather than a financial institution. Crowdfunding usually involves a number of investors. This type of lending is suitable for all types of businesses and is much easier to secure than a bank loan.

Asset Finance

If you have a fledgling business which needs expensive machinery or equipment in order to grow, asset finance could be the solution. It allows you to spread to upfront cost of the equipment over time, so you don’t need to worry about finding large amounts of money for necessary business assets.

Want to find out more about how businesses are beating the big banks? Take a look at Genie Lending’s case studies.

The post Beat the Big Banks with Alternative Finance appeared first on Genie Lending: Business Loan Alternative Finance Specialists.

There’s a number of factors which have contributed to the boom of alternative finance solutions, such as peer to peer lending and crowdfunding. The uncertain global economic market has definitely played a part, as the recession impacted banks and traditional lenders. Also, consumers and now much more comfortable using the internet to apply for loans and transfer money, which opens up a wealth of opportunity for the financial sector.

Discovering Crowdfunding and P2P Lending?

They are often grouped together but there is a distinct difference between crowdfunding platforms and peer to peer lending. In both cases, it is usually a number of investors who will contribute to the amount you borrow.

P2P is very similar to a business loan from a bank, except that you’re borrowing off real people. You’ll pay back interest to your investors in return for the borrowed finance, and it’s a flexible way for companies to receive a fast cash injection.

Crowdfunding is different because you will receive money from a group of individuals or organisations to make up the amount you require. You will then need to offer your backers some sort of reward – for start-ups this could be a perk such as a discount or free product. Alternatively, if you’re looking for big investors then you may need to offer equity in your business or a profit share – think of Dragon’s Den.

Usually, crowdfunding is a great option for entrepreneurs and start-ups while peer to peer lending is more suited to established businesses.

Why are they so Popular?

These types of alternative finance are now mainstream because it is so difficult to get a traditional business loan from a bank. Lending has decreased for years now, making it impossible for people to get their business ideas off the ground. Without personal investment, entrepreneurs are left with no choice but to pitch their idea online to investors. Even established businesses with a strong trading history can struggle to be accepted for financial help from a bank.

Another reason why peer to peer lending is attractive is the generally low interest rates. If you apply for P2P through a financial broker, they will look at all offers and all interest rates and offer an average interest rate. Larger financial institutions have less competition so don’t offer the best deal.

Ready to see what all the fuss is about? Contact us to find out more about P2P or crowdfunding.

The post Why Has Crowdfunding and P2P Lending Become so Popular? appeared first on Genie Lending: Business Loan Alternative Finance Specialists.

Peer to peer lending platforms hit the financial market about a decade ago – but there are still many Brits who have never heard of it or don’t understand how this type of borrowing works. Alternative finance solutions such as crowdfunding and peer to peer lending can help businesses access cash which wouldn’t be available to them from a bank, and is also a way for investors to get a healthy return. Peer to peer lending schemes can also be used for personal borrowing, to fund debt consolidation or home improvements for example.

Because this is so far away from traditional lending, it can be difficult to understand. Genie Lending’s peer to peer specialists explain below everything you need to know about peer to peer lending.

There was once a time when banks were the only option for businesses, property investors and individuals – but now there is a safe and fast way to secure funding for any project.

What is Peer to Peer Lending (P2P)?

If you take out a loan from a bank, you are lending money from that financial institution. If you us apeer to peer scheme, you are lending money from people instead. That is the vital difference between peer to peer lending and traditional bank lending. The people involved in the transaction are unknown, and borrowers have to go through peer to peer lending companies such as Genie Lending.

Why is it Popular?

As banks in the past years have been cracking down on lending, many businesses simply don’t bother applying for loans anymore. Now there have a legitimate alternative in peer to peer funding, which actually offers many more benefits than a bank loan. Both lenders and borrowers stand to benefit from peer to peer lending, which is why it is an attractive solution for the market itself.

Here are some of the main advantages of peer to peer funding:

• You are much more likely to get accepted for credit
• You don’t have to go through a bank and deal with a difficult application
• Much faster access to the cash than with a bank application and approve process
• It offers more competitive rates, due to less infrastructure and administration
• It is protected by government legislation since 2014

Growth of P2P Lending

The peer to peer lending sector has recorded huge growth over the past five years – and with Brexit putting even more uncertainty on the economy and the high street banks, it looks set to continue growing. P2P is becoming a mainstream funding solution, with the market providing over £5bn in loans in the second quarter of 2016 alone, according to data from the peer to peer finance association. With so many individuals and businesses benefiting from this fresh way of lending, there is no need to despair at your declined bank loan letter.

Who am I borrowing off?

The main distinction between this type of lending from others, is that you’re borrowing money off money rather than a financial institution. A group of small investors will lend you the money instead of the bank, and you’ll still have to pay an interest rate when repaying it. Typically borrowers will pay less interest than a traditional bank loan, and lenders get more interest than they would if they had cash sat in a savings account. This is why peer to peer lending has been so successful – it has advantages for both sides.

To access peer to peer lending, you will need to contact a specialist broker or join up to online funding websites. These will help match borrowers with lenders and arrange a peer to peer loan on your behalf.

What is the difference between peer to peer lending and a bank loan?

First of all, it is much easier to access finance through peer to peer lending than get approved for a traditional high street bank loan. Secondly, you should understand that you are lending off individuals rather than a financial institution, and because of this fact you are likely to pay less interest on the loan.

Is it safe?

From a borrower’s point of view, it is just as safe lending from peer to peer platforms as it is from a bank. The risk is on the side of the investors, as they can’t be certain you will make all the repayments. However, the peer to peer lending industry has gone from strength to strength. One of the biggest players, Funding Circle, lends £65.4 million a month around the world. The sector has also been regulated by the Financial Conduct Authority since 2014 to ensure best practices by alternative finance providers.

Find out more about peer to peer lending on our website or by calling us for advice.

The post How does Peer to Peer Lending Work? appeared first on Genie Lending: Business Loan Alternative Finance Specialists.

From a government backed loan to angel investors, take time to research the best possible funding path for the year ahead. Here are some lending solutions which are trending at the moment, offering legitimate ways to kick-start your business.

Crowdfunding

The growth of crowdfunding has led to countless web platforms being set up which allows anybody to set up a product or business idea. From Kickstarter to Crowdcube, people can generally invest anything from £5 to £500,000 to ensure good ideas are brought to life. With this type of funding bear in mind that high level investors may wish to be shareholders and you could end up dividing future profits hundreds of ways. Also, if you don’t reach your funding target you get absolutely nothing at all, which is a huge disadvantage.

Start-up loans

Some entrepreneurs may be eligible for a government backed loan which offers very low interest rates. However, there is a strict criteria to meet and lots of national competition for these loans so they are pretty hard to secure.

Angel Investors

Individuals which are wealthy and interested enough to invest in your business must be sent from Heaven! You can meet angel investors independently on Linked In, or use an online platform to be introduced. They can invest large amounts individually or act as a group to invest in one particular business.

Peer to Peer Lending

This is a type of business loan which is offered from an individual rather than a financial institution. The terms are often more flexible, sometimes the loans don’t need to be secured. To obtain this type of peer to peer funding you often need the contacts of a broker who can match peers with businesses requiring funding.

Pension Led Borrowing

Did you know that if you’ve built up an impressive pension pot, you could use this to fund your business? Even if you don’t have access to it, you can secure a loan by using your pension as an asset.

Good Luck!

The post How to Fund Your Business in 2017 appeared first on Genie Lending: Business Loan Alternative Finance Specialists.

Personal Loan

A personal loan is usually unsecured, and is available from most high street banks. The amount you can borrow will depend on your credit history and many banks will now also check your income to see if you can comfortably afford the repayments. Interest rates on personal loans can be remarkably high, which makes them unsuitable if you only need to borrow a small amount of money, or if you plan on paying it back at a later stage.

If you are thinking of borrowing money to invest in property or a renovation, you may like to consider bridging finance instead. It’s a lot easier to be approved for this type of finance, regardless of your circumstances or credit score – however you do need to own a property and this is offered as security to a lender. This is a short term finance solution available to individuals or limited companies.

Business Loan

As the name suggests, this type of loan is for businesses or entrepreneurs setting up a new business. You could need extra capital to invest in stock or machinery, or perhaps renovate a property or expand. Being approved for a business loan from a bank is becoming more and more difficult, but there are alternative finance options available.

Crowdfunding

Rather than borrow from one strict financial institution (a regular bank) you now have the option to lend money from a group of small investors. This lowers the risk for the lenders as they aren’t lending the full amount alone. To qualify for this type of peer to peer lending, you usually need to own a profitable business with good records, but you can choose from a secured or unsecured loan.

Buy to Let Funding

If the reason you’re looking for finance is to buy a property to let, then there are tailored financial solutions for this situation. A buy to let bank mortgage may not be appropriate, but you could benefit from buy to let funding from premium lenders. This is the same as a long term commercial mortgage, but without the application hassle you’d experience at a high street bank.

Have you found the best loan for your circumstances? Get in touch with our financial experts at Genie Lending who can advise further.

The post Which Loan is Best for You? appeared first on Genie Lending: Business Loan Alternative Finance Specialists.

• To start up a business from scratch – a business loan could secure a premises, help with marketing costs and buy stock
• To expand – businesses need upfront cash for expansion plans
• One-off business expenses – a company could have to replace large machinery or get hit with a significant fine or tax bill they are unprepared for
• To pay employees – some months businesses might not have enough income to pay staff wages
• To manage cash flow – if bills and invoices are piling up, a small business loan can help bridge the gaps

If you are struggling with the day to day running finances, then it could be time to apply for a business loan. However, once you’ve decided you need to apply, actually being approved for the business loan is a different matter.

Bank Business Loans

Getting a business loan from a bank is notoriously difficult. In these uncertain economic times, banks are reducing their lending which is bad news for companies trying to keep afloat. To be accepted for a bank loan, you may need a minimum monthly turnover and have at least two years’ trading history and filed accounts. This isn’t feasible for many modern businesses who are in need of a loan.

Peer to Peer Business Loans

Pioneers in finance have come up with a solution – peer to peer business loans. This type of lending is almost identical to a bank loan, except you are borrowing off individuals rather than banks. They are equally as flexible in terms of the amount you need to borrow and the period to pay back, but they are much easier to secure.

Whether you need an unsecured business loan or a peer to peer lending agreement, our finance experts can help.

The post Should I Apply for a Business Loan? appeared first on Genie Lending: Business Loan Alternative Finance Specialists.