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Alternatives To Bank Financing

26 Feb 2016

There are plenty of viable alternatives to taking out a bank loan if you are in need of quick cash flow relief or much-needed capital to fund an acquisition. Here are some of the options available to you.

Commercial and Investment Mortgages

These are generally taken out on the purchase of commercial premises for let; most commonly offices, shops and buy-to-let property. Unlike standard mortgages, the lender will take account of the potential earning power of the land and property in question rather than the earnings of the individual taking out the mortgage.

Lenders will take special interest in the type and location of property, lease terms, quality of tenant and rental rates to prove that the income from purchasing the property will eventually be paid off.

Unsecured Business Loans

Unsecured business loans can be taken out for shorter-term projects and expenditure. These can be used to fund the purchase of many things – including equipment – it can also help to alleviate cash flow problems, support working capital, provide funds for expansion and growth, or to reduce an overdraft.

Business Asset Finance

This is a method where you can acquire the necessary assets needed to expand or continue trading, and make regular small payments based on cash flow abilities. It is popular among many types of business – from office-based companies to manufacturing and agricultural services.

It is a good alternative to a bank loan because borrowers can receive increased tax benefits and can budget payments based on their own circumstances. Furthermore it can reduce a large initial outlay on an expensive item or investment. Legally, the finance cannot be recalled before the contracted date of return.

Sales Invoice Financing

This is a good option for companies or individuals who are struggling to chase up unpaid invoices or bills. It is essentially a service that allows a third party to take over the debt collection responsibilities for an agreed percentage of the value of outstanding invoices, which can free up valuable time for other business activities. This is called Debt Factoring and can free up cash that is tied up in unpaid invoices.

Another option available to companies is Invoice Discounting, which involves retaining credit control and managing your sales ledger. This means that clients will not know that you are not collecting the debts and will reduce potential stigma often connected to invoice financing.

An NGI Finance Case Study

A local accountant approached NGI to help a client with an owner occupied commercial mortgage as their bank were taking a long time to offer terms. The Business was well established and had a chance to purchase their existing commercial property.

NGI managed to secure an offer within 2 days beating the banks commercial mortgage rate.

A £90,000 unsecured business loan was also obtained to help with the refurbishment of the building. The clients are extremely happy with the service

“ It only seems to get done quickly when we use NGI”

Author bio:

This is a guest article by Maria Morris, Director of NGI Finance. Based near Oxford, NGI Finance has helped businesses across the UK secure over £100m worth of funding since its inception.

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