It’s no secret that positive cash flow is necessary for any business to succeed – regardless of its size or scale.
At the same time, a lack of available cash on hand is one of the leading causes for small to midsize businesses to fail in the UK (as well as throughout the rest of the world). If your business doesn’t have enough cash available to meet payroll, to take advantage of new opportunities as necessary, to market and to advertise the odds of success dwindle pretty quickly.
Combine that with a traditional financing landscape in the United Kingdom that remains a little bit leery about offering financing packages and lending solutions to small business owners and trying to succeed in the world of business today as a new entrepreneur becomes a bit of an uphill battle.
Thankfully though, with alternative financing options in the United Kingdom really starting to proliferate you don’t have to go to banks and other traditional lenders for your funding any longer.
According to a recent survey, conducted by Bruc Bond, 50% of all small to medium-sized businesses in the UK are leveraging nontraditional lending solutions these days. And that figure is expected to grow exponentially in the years to come.
Here are just a couple of the alternative financing options United Kingdom small business owners and entrepreneurs have an opportunity to take advantage of these days.
According to a number of independent research groups, crowdfunding grew by 14% in the year 2019 compared to 2018 – hitting a high watermark of just slightly over £68.7 million over that 12 month mark.
On average, small business owners in the UK were raising just north of £8500 – which isn’t necessarily a mountain of money in the world of business these days, but it’s enough to bootstrap a startup and it’s enough to get micro-businesses up and running.
This is especially true when these businesses are taking advantage of everything the internet has to offer, a technology that has leveled the playing field for creating a global business significantly.
Peer to Peer Lending
Peer to Peer (P2P) lending solutions are incredibly popular these days with the small business community in the United Kingdom, and for good reason.
Essentially private lending packages set up between two individuals (or an organization and a small business) these kinds of loans closely mimic the types of lending packages you would be able to secure from a traditional lender – like a bank – without the financial institution sitting in the middle of the transaction.
A lot of groups have popped up and proliferated online in the United Kingdom and around the world to offer these kinds of lending solutions to small business owners today. This opens up a pool of individual investors business owners can reach out and contact, opening up new opportunities that simply wouldn’t have existed in the past.
Interest rates are usually quite a bit lower than what you get from a traditional bank, the overall application process is usually pretty simple and straightforward, and access to the funding you have been approved for is almost instantaneous.
On the flip side of things, though, to take full advantage of everything P2P lending has to offer small businesses need to provide at least two years of financial records and to have at least £100,000 of cash flow moving into and out of a business annually to be considered.
The Financial Conduct Authority has been looking closer at the P2P lending world as well, which will certainly make things safer but may also eliminate some of the opportunities that exist right now.
With hundreds of different grant packages available for business owners in the United Kingdom it’s impossible not to mention this source of funding, even if the criteria for securing these kinds of grants can be very stringent.
Anyone that has ever applied for a UK governmental business grant understands that the application processes long, drawn out, and has even been described as torturous. It’s definitely something that you are going to want to prepare for well in advance of actually needing the funding you may be eligible for, too.
At the same time, though, businesses that receive UK grants gain access to a huge pool of funding that can transform their financial future almost overnight. More than 170 different grants can be researched via the gov.uk/business finance support website and it’s well worth looking over your options and opportunities before writing grants off completely because of the application process.