Turned down by your high street bank?

05

Feb

Turned down by your high street bank?

posted by: Jason Hulott

Has your company recently been turned down by your high street bank for business finance? It is probably not alone but joins the queue of other businesses similarly looking for necessary funding.

Borrowing from your high street bank

In February of 2018, the British Business Bank reported that only 1.7% of smaller businesses were applying for business loans – principally because fewer than half of them believed their bank would approve the business finance even if they applied.

As a result, many of these smaller businesses simply gave up and as many as 70% of them shelved plans they might otherwise have pursued to expand their businesses.

Indeed, the lack of readily-available high street finance led to the government intervening and promising an extra £15 million of funding specifically to help small businesses which had been turned down by their local bank.

In an article dated the 18th of December 2018, the Entrepreneur Handbook explained how long it often takes for a bank to consider your application – weeks or even months. During that time, the bank pores over your detailed company accounts, demands a detailed business plan and cashflow projections. It is all information on which your rejection may be based.

Where an application is granted, you are probably going to be asked to support any significant business loan with acceptable security.

Alternative lenders

It is fortunate, therefore, that alternative high street finance has been provided by independent lenders stepping into the breach left by the banks – and, in many cases, what was once high street finance has been transferred entirely online, just as we have done here at Cubefunder.

Many continue to be balance sheet lenders – lending their own funds, just as you expected your high street bank to do – yet with the possibility of competitive interest rates, more flexible repayment terms, and without the need to offer collateral against your borrowing, suggests Business Matters magazine in an article on the 12th of June 2018.

Unsecured, fixed-rate business loans online

With our service, you may typically apply for a business loan of between £5,000 and £100,000.

These are short-term loans, generally repayable between 3 and 12 months – depending on the needs and circumstances of your company – but thereby avoiding the accumulation of significant interest charges you face with a loan stretching over three, five, or even more years.

Since they are also advanced at a fixed rate of interest, your monthly payments of equal instalments are known from the very start of the loan – so may be managed more easily within your cashflow budget.

Best of all, perhaps, is the ease and speed with which applications may be made for these unsecured loans. Unlike other forms of high street finance, no security needs to be offered – so none of your company or personal assets is put at risk – and there is no demand for a detailed business plan or cashflow projection.

Instead, a decision in principle on your proposed borrowing may be indicated more or less immediately and, on the basis of that reassurance, you may proceed to a formal application.

Your formal application allows the lender to take a view on the financial standing of your company and, if it is approved, the requested funds are typically transferred directly to your company bank account within a matter of days.