Alternative Business Funding

Alternative business funding has quickly become one of the most popular finance solutions for SMEs and small business owners operating in the UK.


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Over the last few years, alternative finance has become a highly popular funding solution for SMEs and small business owners. As high street banks continue to cut back on the availability of business finance following the economic crash, alternative business funding providers have stepped in to offer a variety of different products to support the growth of UK businesses.

As the name suggests, alternative business funding offer an alternative to traditional lending agreements generally associated with high street banks. Terms are usually more flexible, tailored to suit the needs of the business and funds can be made available incredibly quickly. Both secured business loans and unsecured business loans are offered by a variety of alternative finance providers, giving business owners and SMEs greater options when looking to invest in business growth. Alternative business loans can be used to invest in new premises, refurbish an existing property, increase stock or simply assist with cashflow.

Depending on the circumstances and type of finance arrangement offered, businesses with poor credit histories could be considered for alternative business funding. So, if your business has received a CCJ or missed repayments in the past, it is worth applying for this type of alternative finance to see whether you qualify.

Typical forms of alternative business funding include:

Secured Business Loan

A secured loan requires a business to offer an asset as security against the loan. High value loans typically require some form of security and the amount of funds available is largely dependent on the value of the asset. If in the event your business could not meet the repayments, the lender would seize the asset as settlement for the loan.

Merchant Cash Advance

An unsecured merchant cash advance, also known as a business cash advance, is probably one of the most innovative alternative finance products to have entered the market in recent times. Available to retailers and merchants who accept credit and debit card payments, funds are made available based on the monthly turnover of card transactions. A percentage of future card sales is then taken automatically at the time of sale via the PDQ machine to repay the loan.

Invoice Finance

The three forms of invoice finance include invoice factoring, invoice discounting and selective invoice finance. This type of finance suits those businesses that acquire payments from customers via regular invoices. Effectively, the company’s invoices are sold to a lender. A percentage of the invoice value is paid straightaway. The final balance minus the lender’s fee will be credited once the customer has paid the invoice. Factoring companies will also manage credit control whereas those businesses opting for discounting will be required to chase repayments from the customer. Both these forms of invoice finance require the whole book of invoices to be sold to the lender. This is not the case when it comes to selective invoice finance. A business owner may select individual invoices to factor as and when required. As with discounting, the responsibility of credit control remains with the business.

Asset Finance

Two forms of asset finance are available to business owners. In the first, existing company assets are used as security against the loan. In the second, collateral such as vehicles, plant or equipment can be leased, with some arrangements giving you the option to purchase and own the goods at the end of the agreement.

Find out if you could secure an alternative business loan of up to £2million by completing our online application. You will receive a decision within 48 hours.

Does Your Business Qualify?

At Capalona, we can help find the right funding solution for your business. Our alternative finance partners offer a variety of products and can tailor a funding arrangement to suit your needs and support the growth of your business. To qualify for alternative business funding, you must operate a UK-registered business.

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