If you need funds fast, you need funds fast. Perhaps you need funds fast because of an unforeseen expense, or because you have taken on a contract on short notice and need to acquire equipment to get the job done.
Whatever the case, there are alternative sources of funding outside regular finance to consider. These may be useful if you have been turned down for traditional credit, or if you can’t access a good rate with traditional finance.
The following alternative sources of finance are also typically faster to arrange than standard business finance and have unique benefits. There are three types to consider and which is right for you depends on your circumstances:
For: Businesses with valuable assets
Refinancing is a relatively simple finance facility in which you sell an asset you own to a lender. The lender takes ownership of the asset on paper, and then hires the asset back to you physically over a term that spreads the cost of purchase. Typically, agreements run from 12 to 60-months, but some run for 6-months.
Over the term you get exclusive use of the asset. It stays in your business, fully deployable. Assets prime for refinancing include commercial vehicles, industrial equipment, machinery, office electronics and specialised equipment, like cameras and lenses. You can release 100% of the current market value of the asset.
For: Businesses struggling with cash flow
Thousands of small and medium-sized businesses struggle with cash flow, and the number one reason for that is unpaid invoices. This can happen because a client is late paying, or because the payment terms leave a large gap between completing work and getting paid. A good example is Net 30 or Net 60.
Invoice discounting uses your sales ledger (unpaid invoices) as collateral for finance. Every time you raise an invoice, you can get paid earlier by selling the invoice to the lender.
This has the benefit of giving you access to money you are owed earlier, which will solve many a business’s cash flow issues.
For: Businesses who need an asset only a short while
One of the conundrums some businesses face is acquiring expensive assets for only a short period of time. Say, up to 12 months. This may be necessary to fulfil a single contract, perhaps as part of a construction project. Finance leases and hire purchases aren’t suitable because they are for longer term use.
The solution is an operating lease. These leases last 6-12 months and don’t have the option to extend the lease or purchase the asset.
It is a simple lease agreement with strict, set terms, with the benefit of a clear destination for you, the lessee. For an initial outlay of perhaps just a month’s rental, you get to acquire expensive assets without the risks and rewards of ownership.
Want to find out more?
As a specialist broker we can advise and recommend finance products based on your individual circumstances. Our team are here and ready to help