31 Aug 5 Reasons Why Non-Bank Lenders Will Change SME Finance
Getting financing from the bank can be a difficult process, filled with a lot of paperwork and a long wait just to see if you’ve been approved. After the Celtic Tiger Crash, banks began to tighten their lending criteria, leaving many small and medium businesses without a reliable source of finance. This is where non-bank lenders come in. The process is often quick and easy as only a few documents are required and approval only takes a week. Let’s use the small business capital platform, GRID Finance as an example:
Why Non-Bank Lenders?
Banks have tighter lending criteria, so the lower your credit history, the higher the risk for them. However, many non-bank lenders, such as GRID Finance, will be able to lend to those with a lower credit history simply because they will receive their repayments through the borrower’s card machine.
Banks are large institutions and because of this, they don’t have the same personal touch that non-bank lenders can have. Customer service in GRID Finance is a top priority. They are there to help and fund SMEs, and will even provide you with a GRID Score so you can improve your credit history.
Rates of interest are usually set between you and the non-bank lender. Facilities for repayments are through instalments that suit you and your business. GRID Finance works with the natural ebb and flow of your business so you only make repayments when you have cash flow coming through your card machine.
Non-bank lenders will often be an option for those who don’t meet bank lending criteria due to being self-employed or having a lower credit rating because many will look at how high your businesses cash flow is. GRID Finance provides you with a GRID Score so you can make changes to help your credit history. They also provide finance to businesses who may have been refused a bank loan in the past. This is because they look at the businesses card machine cash flow, unlike the traditional institutional lenders.
GRID Finance provides you with a GRID Score so you can make changes to help your credit history. They also provide finance to businesses who may have been refused a bank loan in the past. This is because they look at the businesses card machine cash flow, unlike the traditional institutional lenders.
Mobilisation of Resources
Non-bank lenders often use peer-to-peer financing which is converting savings into cash. GRID Finance allows people to invest in your business. This can be undertaken by anyone, making it a great mobilisation of resources from those who have money, to those who need it.
Independent Finance Provides Ireland
The IFP Ireland is a group of finance providers who are not part of the domestic banking industry with a goal to increase the funding options for SMEs. John Power, IFP Ireland Chairman, noted that “companies in Ireland need a more expansive choice of funding, where there is less reliance on a single source of finance from a limited number of providers”.
GRID Finance is a member of the IFPI. They and other alternative financing solutions can be found on the IFPI website.