It’s no secret that if a small business is looking to grow it will require financial assistance. There is always stock to buy, marketing campaigns to roll out and staff to hire – none of that is cheap. However, in the past decade the banks have distanced themselves from small business lending, and non-bank or ‘alternative lenders’ are increasingly servicing this need. In the past five years, these lenders have seen a dramatic increase in market share, in the US rising from 10 to 26 percent, and Australia’s alternative finance market is now following suit.

1. What is Alternative Finance?

Alternative finance is a broad term that includes the wide range of loan options available outside of traditional banks. Alternative lenders are flexible and as such, an attractive option for small business owners who have been denied finance by a traditional finance provider.

These lenders have simple, online application processes, issue business loans without personality security and have flexible repayment structures.

2. What’s the Real Difference?

Applying for a small business loan has traditionally been a tedious and time-consuming process, involving mounds of paperwork. Alternative lenders have streamlined online application processes and require little to no paperwork.

Alternative lenders have also developed their own credit assessment algorithms which can provide a more accurate picture of a business’ financial health. Unlike the banks, they will consider everything from the volume of transactions and recent business cash flow to customer satisfaction levels as told by online reviews and/or social media posts. This gives SMEs the best possible chance of getting an application approved.

The Australian Bureau of Statistics data indicates that small business loan applications are rejected at roughly twice the rate of medium-size businesses – alternative lenders are remedying that.

3. But Aren’t These Lenders More Expensive?

While alternative loans may have slightly higher interest rates than the banks, the truth is they fill a serious gap for small businesses who aren’t able to access funds from a traditional lender. Recent statistics show that roughly 20,000 Australian businesses have trouble accessing finance through traditional channels – alternative lenders help these businesses.

Alternative lenders will also often lend without security which means an SME no longer needs real estate assets to grow their business.

4. What Kind of Loans Are Available?

There are a number of loan options available to help small businesses manage cash flow or grow their business. At Spotcap, we offer lines of credit and small business loans which work in a similar fashion to a typical loan from the bank. These are good sources of finance which can be accessed quickly and easily.

Other types of alternative finance include:

  • Factoring or advances;
  • Trade creditor loans;
  • Export loans; and
  • Equity loans.

5. How Do I Apply?

Every alternative lender has its own application process and set of requirements but ours can be completed entirely online in as little as five minutes. All you need to do is register and enter some basic personal and business information, connect your business bank account and accounting software. You’ll have an answer on the same day and if you’re approved you can access the funds within 24 hours.


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Lachlan Heussler
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