Updated: 17th January 2020
Traditional bank loans have become difficult to secure since changes were made to the industry following the global economic recession, but it’s paved the way for alternative methods of funding that may be better suited to the type of agile business world we now work in.
Online lending has certainly increased the speed with which funding can be applied for and sanctioned, but it’s the sheer number of options that makes alternative lending so accessible for all types and sizes of business.
New banking landscape
Although the mainstream banks retain an important position on the high street, new banking models have emerged in recent years. So-called challenger banks have disrupted a once steadfast industry, and revolutionised the way we interact with them.
They’re synonymous with flexibility and streamlined processes that allow applications to be dealt with quickly, using minimal paperwork. Approaching a challenger bank for funding could be a good option if you need finance fast, and your business has a relatively good credit rating.
Business loans for bad credit or no credit history
If you’re a young business with no credit history, or have a poor credit rating, there are specialist lenders that may still be able to offer funding. You’ll pay higher interest rates than standard loans and won’t enjoy a wide product choice, but the funding could be vital for your business to survive and grow.
Lenders base their decisions on their risk of default so businesses with no credit record are viewed as risky in the same way as those with a poor credit history, as there’s no previous record of repayment on which to inform their decision.