4 October 2018 | By Peter Stevens Community

Alternative Finance: What to look for in a lender?

With traditional avenues of funding increasingly difficult to access for SMEs, SME Capital’s Peter Stevens suggests what to consider when choosing an alternative finance provider

For many SMEs, accessing meaningful credit lines through traditional lenders has become more difficult since 2008 due to the enforcement of stricter and less flexible lending criteria. Thankfully, the times when banks were the only option for firms to secure external finance are long gone.

A booming market of alternative finance is opening up to SMEs. And as this becomes more mainstream, the breadth of options is giving business leaders greater control in finding a solution best suited to their needs.

Lending decisions embrace both the rational and the commercial, resulting in businesses being assessed on their individual merits. With traditional lenders generally often focusing on asset-coverage, an alternative lender’s appetite is likely to be driven instead by a broader combination of historic, current and future profitability, as well as its ability to generate positive cash-flow.

So how do you find a lender perfectly suited to meet your business needs?

  • Fast Response Time
    Whether it be market, political or competitor driven, the speed of change in the economic climate will continue to increase. Successful SMEs will have management teams that are quickly able to adapt and make the necessary changes to their business and its products or services. A good alternative lender must be able to match this pace, responding and making decisions swiftly in order to support its customers’ choices and ensure that no opportunities are missed.
  • Bespoke and Flexible
    Your alternative lender must be able to accurately assess the challenges and strategic financing needs that are unique to your business. Finding an alternative lender which takes the time to really understand your business is really important. This means that your ideal lender will be able to tailor loans on a case-by-case basis in order to meet your requirements.
  • Dedicated and Personal
    No matter who your lender, obtaining and maintaining a loan can be arduous if communications break down. It is therefore important that you have direct access to a support team or individual dedicated to managing your loan, meaning that they are always up to date with progress and can intervene as required to offer informed guidance and assistance.

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