Alternative Finance for Business

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With a major focus on new technology, there is an ever-increasing need for businesses to find sources of funding for growth and investment.

Gone are the days when financing was restricted to high-street banks offering loans based on difficult-to-meet acceptance criteria. There are a host of alternative options now available to businesses.

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Sources of Finance:

Equity crowdfunding is where a group of people collectively invest in an early-stage business, in return for shares in the company. Crowdfunding makes use of the easy accessibility of vast networks across social media and crowdfunding sites.

Invoice financing is where a lender will buy off an invoiced debt, providing them with an immediate cash boost. When invoices are then paid by the customer, the business will receive the payment minus anything owed to the lender.

Merchant cash advances allow a small business that accepts credit or debit card sales a cash advance, with a percentage then deducted from future card sales by means of repayment.

With peer-to-peer (or P2P) lending, businesses can boost their cash flow by borrowing directly from those with investment money. The lender will earn interest from payments on repaying the investment.

Director Guarantee:

A director guarantee is in essence, a term loan, taking on a slightly different arrangement for business funding. The loan is backed by the guarantee that the director will be personally liable for repayment; if a business finds itself in the position of no longer being able to repay debts. A director may choose to secure business loans against their personal assets, such as their homes. This acts as security against the loan.

Find support on director guarantees from specialist lawyers.

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When undertaking any legal or financial commitment, such as a director guarantee, it is imperative that specialist, independent, legal advice is sought beforehand.

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