Approval rates for small business loans are increasing
Accessing capital for growing businesses has always been a challenge and until recently, banks were the primary source of funding for small businesses.
Following the financial crisis, and in the wake of the economic recovery, new types of business loans are emerging, online alternative funding solutions for small businesses.
Online alternative funding has many strengths, including accessibility, efficacy, speed, and chances of being approved. With many of the big players in the alternative lending space offering online and mobile applications, business owners can apply for a loan in under 30 minutes, receive approval in a matter of hours and have access to funds within a number of days. This new way of funding contrasts significantly with conventional bank loan systems which typically require hours of paperwork, actual visits to the bank and several weeks to wait for approval, before being able to securing funds.
With 73% of small and medium-sized enterprise (SMEs) aiming to grow their business over the next 2-3 years, the demand for funding has never been higher. However, the majority of SMEs are still unaware of the option of alternative lending. Once they are declined from the bank, up to 40% are discouraged from even continuing their search and in some cases are forced to close their business or experience static growth. Despite their small scale, alternative players have the potential to fundamentally change the way in which small businesses access capital, creating greater competition, price transparency, and a better customer experience.
Navigating and understanding the options available can be overwhelming and discouraging, however the process can be easy if you use Fundbird.co.uk – a free online service that helps SMEs find the best funding solution for their business. Fundbird identified a need within the marketplace to aggregate legitimate lending sources and match small and medium businesses with the right alternative funding options. The company has partnered with the UK’s top funding providers based on criteria including: competitive interest rates, flexible payment terms and helpful customer support and is now pre-qualifying businesses with the most reliable, high quality lending partners.
In the last few months Fundbird has helped over 1,000 SMEs find alternative funding for their business across a variety of sectors in a fraction of the time typically taken by banks. The platform covers multiple financial solutions, including secured loans, unsecured loans, asset based finance, trade finance, property finance, invoice finance, merchant cash advance, equity crowdfunding, peer-to peer lending, and start-up loans. Among Fundbird’s alternative lending partners are MarketInvoice, Ebury, Liberis, iwoca, Fleximize, Crowdcube with plans to reach over 20 by the end of the year.
Sharon Argov, Chief Executive and Co-Founder said, “Despite the rise of alternative finance models, extending their options far beyond the banks, the new alternative lending landscape is still perceived as unchartered territory and can be daunting for SMEs that don’t have the time to explore the new landscape. We want to make this new world of finance accessible for everyone.”
While the online market is still in its early stage of transformation, it is clear that traditional small business bank loans are becoming a way of the past. The traditional bank lending model has left gaps that are now being filled by new alternative lending offerings. This should benefit small businesses who, despite having to deal with higher interest rates in some cases, could find more transparency in product and pricing options, lower search costs, and better speed and customer service.
