1. What Are Alternative Business Loans?
Alternative business loans are non-bank funding options designed for small to medium-sized businesses seeking fast, flexible finance. These loans are provided by private lenders, online platforms, or specialist providers and are ideal when:
- You’ve been rejected by banks
- You need fast funding
- You want tailored repayment terms
2. Peer-to-Peer (P2P) Business Loans
P2P lending platforms connect borrowers directly with investors:
- Faster approval
- Flexible terms
- Competitive rates
Popular platforms include Funding Circle and Assetz Capital.
3. Revenue-Based Financing
Also known as royalty-based financing:
- Repayments are a fixed percentage of monthly revenue
- No fixed monthly repayment pressure
- Ideal for growing businesses with fluctuating income
4. Merchant Cash Advances
Borrowing against future debit/credit card sales:
- Repayment comes from a portion of daily sales
- No fixed terms—repay as you earn
- Great for retail, hospitality, and service sectors
5. Invoice Financing
Turn unpaid invoices into quick cash:
- Immediate access to 80–90% of invoice value
- You repay once the client pays
- Improves cash flow without taking on debt
6. Asset-Based Lending
Use assets (machinery, vehicles, inventory) as security:
- Higher borrowing amounts
- Lower interest than unsecured loans
- Works for businesses with valuable equipment or stock
7. Crowdfunding
Raise capital by appealing to the public online:
- Equity crowdfunding (sell shares)
- Rewards-based (offer perks or products)
- Good for innovative or community-driven businesses
8. Start Up Loans (Government-Backed)
Government-supported loans for new businesses:
- Up to £25,000 per person
- Fixed 6% interest
- Free 12-month business mentoring
Accessible even for those with poor credit.
9. Short-Term Business Loans
Alternative lenders offer quick loans with 3–12 month terms:
- Fast application and approval
- Higher interest than banks
- Useful for emergency needs or bridging finance
10. Business Credit Lines (Alternative Providers)
Like a credit card, but tailored for businesses:
- Only pay interest on the amount you use
- Revolving access to funds
- Offered by companies like iwoca or Capital on Tap
Frequently Asked Questions
1. Are alternative business loans safe?
Yes, if sourced from regulated, FCA-authorised providers. Always check credentials.
2. How fast can I get funded?
Many lenders offer approval and funding within 24–72 hours.
3. Do alternative loans affect credit?
Yes. Late payments or defaults can affect your business or personal credit profile.
4. What documents are required?
Typically: ID, proof of trading history, bank statements, and business plan.
5. Are interest rates higher than traditional bank loans?
Usually, yes—but you get more flexible terms and quicker access.
6. Can I apply with poor credit?
Yes. Some lenders focus on business performance, not just credit history.
Conclusion
Alternative business loans offer a valuable funding path for UK businesses that need speed, flexibility, and creativity beyond traditional banks. Whether you’re scaling up, bridging cash flow gaps, or launching a startup, these modern lending solutions make business finance more accessible in 2025.