Leveraging Alternative Finance Solutions for SME Success

by | Jun 15, 2024 | Non-Bank Working Capital

Alternative finance solutions may be the missing link when building a successful business that is challenged, especially during an economic downturn. However, understanding how to navigate a tough market is essential for the long-term sustainability of your business. In this article, we’ll explore how a challenging economy impacts businesses and discuss financial solutions available, including working capital finance, alternative capital, unsecured business loans, asset finance, and business line of credit.
know how to navigate a tough market …

Alternative Finance Solutions
Utilize working capital finance to maintain daily operations and cash flow

Consider unsecured business loans for flexible, collateral-free funding

Leverage alternative finance solutions for goods and services minimize upfront costs

Leveraging Alternative Finance Solutions for Success

The alternative finance sector continues to evolve with technological advancements and changing market dynamics. The integration of artificial intelligence and machine learning in credit assessment processes is streamlining risk evaluation, expediting loan approvals. Additionally, the rise of peer-to-peer lending platforms and crowdfunding initiatives is democratizing access to capital.

According to a report by Statista, the global alternative lending market is projected to reach $490.51 billion by 2025, with a compound annual growth rate (CAGR) of 21.1% from 2020 to 2025. This robust growth highlights the increasing acceptance of alternative finance solutions among businesses worldwide.

What effects can a tough economy have on a businesses?

During an economic downturn, businesses often face reduced cash flow due to declining revenue, increased debt to cover rising costs, and limited access to additional capital. This restricted cash flow can hinder efficient operations, investment, and innovation, impacting a business’s ability to weather financial storms and achieve growth.

Tough economies can manifest in various forms and are often caused by multiple factors. Typically, an economic downturn results in reduced demand for products or services, stemming from recessionary periods, financial uncertainty, geopolitical shocks, or other disruptive events. These conditions can lead to lower consumer spending, reduced supplier stability, and overall market pessimism, creating significant challenges for businesses.

An economic downturn is a decline in the growth rate of Australia’s gross domestic product (GDP). GDP is the total market value of all goods and services produced within Australia. More information from Business Queensland website ‘ Surviving an economic downturn’ .

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Explore trade finance to facilitate reliable international trade agreements

International Trade Finance
Use invoice finance to convert outstanding invoices into immediate cash flow

5 Alternative Financing Options to Explore

Working capital finance is essential for maintaining daily operations and meeting short-term obligations. Traditional banks often have stringent requirements and lengthy approval processes, which can be restrictive. In contrast, working capital finance offers faster and more flexible solutions, enabling businesses to access funds quickly, maintain cash flow, and seize growth opportunities without traditional lending constraints.

Unsecured business loans are a standout feature of alternative finance. Unlike conventional loans requiring collateral, unsecured loans are based on the creditworthiness and potential of the business. This is particularly beneficial for startups and SMEs that may lack substantial assets. According to the SME Finance Forum, 40% of SMEs globally face significant financing gaps. Unsecured business loans provide essential capital for expansion, technology investment, and enhanced competitiveness.

Asset finance allows businesses to acquire necessary assets without incurring large upfront costs, preserving cash flow. This is particularly beneficial during tough economic times, as it enables ongoing operations and growth without depleting financial reserves. By leveraging existing assets such as equipment or vehicles, businesses can access funds needed for expansion, upgrades, and operational improvements, maintaining agility and market share.

Invoice finance provides businesses with immediate access to cash by converting outstanding invoices into liquid assets. This method improves liquidity and reduces the risk of cash flow disruptions, allowing businesses to continue trading successfully without waiting for prolonged payment terms from customers. Improved access to reliable working capital helps businesses navigate uncertain times and focus on strategic initiatives and long-term planning.

Trade finance is vital for businesses involved in importing and exporting. It facilitates new trade agreements with trust and reliability through third-party financiers, ensuring payment and service provision. During difficult financial times, maintaining and creating strong trade relations with suppliers and customers is crucial. Trade finance enables businesses to persevere and recover through economic downturns.

The Competitive Edge of Alternative Finance

Alternative finance solutions offer a competitive edge through speed, flexibility, and accessibility. Unlike traditional lenders, alternative finance providers use advanced technology and data analytics for quicker approval processes. This agility is crucial for SMEs in fast-paced markets, where timely access to capital can mean the difference between seizing opportunities or missing out. Alternative finance also caters to a broader range of businesses, including those with limited credit histories or unconventional business models, fostering innovation and entrepreneurship.

In a challenging economy, alternative finance solutions such as working capital finance, unsecured business loans, asset finance, and cash flow solutions provide SMEs with the tools needed to thrive. These flexible and accessible funding options align with the unique needs of each business, helping them maintain operations, seize growth opportunities, and achieve long-term sustainability. Embracing these alternative finance solutions is a strategic choice, paving the way to sustainable success in a competitive landscape.

Visit Accrutus Capital website to learn more about alternative finance options to help you business or call 07 3184 9183.

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DISCLAIMER

The disclaimer covers content, comments, responsibility, links, government and local laws, jurisdiction and communication methods. None of the contents on this website or blog should be construed as any kind of advice or recommendation. Nothing in it should be taken to constitute a statement that is intended to influence a person or persons in making a decision regarding any investment or financial product. This website or blog does not purport to be complete, accurate or contain all information which its users may require to make an informed assessment of whether to invest in any Offer listed through Accrutus Capital Pty Ltd.

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Small Business and the Fintech Revolution

Small Business and the Fintech Revolution

by | May 14, 2019 | Non-Bank Working Capital

Small businesses create jobs and drive the economy. To enable this business needs fast access to funding. The fintech innovations developed over the past few years have made huge advancements toward this.
Most small business owners are time-challenged and technology has allowed us to shop online, find businesses, instantly market to consumers. Gather intelligence, and communicate with everyone instantly. Technology has enabled borrowers to access loans quickly from a broad range of funding options bypassing the traditional bank. 

Millennial Customers

Mobile payments must be simple and at millennial’s fingertips as the overwhelming majority use their smart phones as mobile banking. Princeton Survey Research Associates International reports 67% of Millennial’s do not have a credit card as of 2016.
Savvy business owner of today must offer mobile payment options and embrace fintech for future viability. Customers want goods and services quickly, simply and accessible everywhere 24/7 in today’s technology world.

Fintech apps open up a whole new dimension for entrepreneurs which can take your unique small business to the very next level. These mind-blowing tools could assist effectively in managing your books, getting paid faster and interacting with your customers and employers. Thereby this financial revolution gives you great tools to streamline your financial operations.

Top 8 Fintech tools for Small Business

  1. Zenefits – this app is known for automating your processes for you to understand the situation. Zenefits is equipped to handle both payroll and benefits
  2. Gusto – is a versatile tool and helps to automate workers’ compensation and taxes. All employees get their remuneration package on time every month
  3. Guideline – helps you to effectively manage your plan for your employees’ benefit. Automated enrolment specifically for your employees when they are qualified for the plan.
  4. Expensify – its known to be an excellent Fintech tool for small business as it would allow all your employees to go ahead and submit their expenses for reimbursement
  5. Emburse – the best feature of Emburse is that it could generate virtual credit cards that could be used by your respective teams. Assign each specific small business unit one card that could be used by everyone belonging to the group.
  6. Xero – a reputed cloud accounting organization that is dominating the global market today for its array of start-up accounting apps. Its best for cloud computing and you could be easily getting live access to all your vital financial information. Such as bank feeds, turnover, cash flow, debtors, and more from all corners of the universe.
  7. Spotlight – very popular for reporting, as well as, KPI management. A robust dashboard tool which could be set up for tracking and enhancing key metrics. Impress your business investors with striking reports such as KPI’s responsible for growth and progress.
  8. Due – is certainly the best choice for managing invoice and payments. The app could accept a broad spectrum of payments and a digital wallet to manage your payment forms. Can deposit money in your precise bank account if you so desire. Recurring invoices are an option as well then wait for your money to come in.

Is Fintech the new gold rush investment?

The fintech industry has matured significantly since 2010 and is touted as the new gold rush for investors. Thereby, growing from 10% in 2016, to a staggering $23.2 billion, with China and USA leading the market. The future of banking industry will be heavily influenced by emerging fintech companies and artificial intelligence technology applications. Consequently, setting the stage for increasing competitiveness. Small business and consumers are the winners as innovations in finance and technology compete for your business.

If your business is still not utilizing these powerful fintech tools, your are really missing out on golden opportunities. Effective tools are available for practically all aspects of your small business. Accrutus Capital is an alternative finance provider offering unsecured business loans and working capital finance for Australian businesses.

 
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How Fintech is changing Small Business

Banks continue to reduce their lending activities to SME’s which are one of the main drivers of the fintech revolution. The huge financing need remains, and there lies the massive opportunity to disrupt this sector. Global banking systems are guided by the Basel III framework and consecutive Basel IV response which is the central element of the Basel Committee’s response to the global financial crisis. It addresses shortcomings of the pre-crisis regulatory framework and provides a regulatory foundation for a resilient banking system that supports the real economy.

What is Fintech?

Innovative technologies created by start-up companies that develop the digital platforms and apps designed to disrupt existing established financial systems. Fintech offers new alternative financial products accessed online delivering a faster and mostly cheaper service. The ever-evolving landscape of the financial technology sector covers a wide variety of technologies, customers and services.

Small businesses have seen the change particularly the simplicity and speed in which fintech has delivered services over the internet. Online platforms offer big data computing, and mobile connectivity. Companies are now able to buy in to complex, feature rich financial software programs and technical services were unattainable for most small business.

Social platforms, business news channels with real-time updates and the insights of big data have provided SME’s with unparalleled business insights. Smart operators can now stay ahead of the game, while offering their customers improved products and services.

User experiences, faster internet bandwidth, and the universal adoption of smartphones have provided real-time access to financial information at unprecedented levels. This has introduced a new wave of fintech services such as omnichannel payments processing, mobile banking, peer-to-peer payments. The fintech boom has provided SME’s with a suite of alternative financing products such as;

Unsecured business loans

Online applications using real-time business data such as monthly turnover and profit margins are taken into account. An algorithm helps to determine whether your business presents a high or low risk to repay the loan. Fast pre-approvals and your company can receive an unsecured business loan within 1 to 3 days compared with traditional bank finance.

Peer-to-peer Lending

Your business has the option to raise funds through a peer-to-peer lending platform offered around the world. Matching you to individual investors without the need of a traditional financial intermediary. Peer-to-peer platforms list your capital requirements online for investors to assess and determine the credit match, then fund your loan.  This is an excellent alternative for innovative or new businesses that do not fit traditional lending criteria.

Equity Crowdfunding

Raising capital through an equity crowdfunding platform is an option if you prefer a quick cash injection via equity. Start-ups who do not meet the requirements to run a costly capital raising program. Your business receives contributions from many individual private investors who in return become a shareholder in your business. Highly beneficial for new businesses to create brand awareness, accumulate loyal fans and build a customer base. Market acceptance is a test of your ideas before making costly mistakes.

Invoice Factoring

Payment of credit and sales invoices remains hugely popular as another way to receive funding and keep your cash flows stable. Quicker online processors have been developed to deliver debtor and creditor finance where an invoice can be paid within 24 hours.

Merchant Cash Advances

For retailers, a merchant cash advance is an excellent source of funding. This works by advancing a lump sum payment in exchange for a pre-determined fixed percentage of your daily credit and debit card sales until the full amount is repaid. Repayments are flexible as the business repays less in months were sales are slower and more in months when business turnover is higher. New companies benefit from a higher approval rate if operating for under 12 months and have no security of offer.

Looking to fund your cash flow?

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Advances for Small Business

Fintech platforms use alternative data sources, such as utility bills and predictive information, to understand their customers their ability to repay. Lenders then create products tailored to their customers, for example providing loans based on cash flow instead of collateral. This enables borrowers without significant wealth or assets such as a home or land to get a loan. As operational efficiencies increase with improved technology, costs decrease, and fintech platforms can afford to serve harder to reach customers.

Data and efficiency advances that allow new customers to be included can just as easily allow them to be exploited. Predatory lenders can target a larger, often less financially savvy audience, providing easy access to capital. Consequently, comes with lots of hidden fees and high interest rates, that lead to a cycle of over-indebtedness.

Enabler of Economic Growth

Innovative financial technologies have the potential to increase economic growth in emerging as well as major economies. Capital allocation is easier to access and increases efficiency, because financial agencies play an essential role in economies. Therefore, technological progress in finance may well generate higher returns that have proved elusive compared with other digital inventions.

Fintech was the fringe of alternative platforms five years ago, for example peer–to-peer lending, crowdfunding and mobile currencies. Finally, being deployed by mainstream financial institutions to tackle central tasks of critical strategic importance. Blockchain (the technology behind Bitcoin) are great examples, offering a radically more efficient and secure way to create and maintain ledgers. Which is certainly at the core of all financial systems and has been slated as a game changer for 2016.

What is the future of Fintech?

The fintech landscape is rapidly changing around the world, and that’s especially true in Europe. This UK enjoys a favourable regulatory landscape, and has quickly become a fertile ground for fintech entrepreneurs. However, the challenge remains for the sector to build a platform that works across multiple borders and jurisdictions. Steve Considine from the Goldman Sachs Investment Banking Division explains that the changing habits and behaviours of the next generation are likely to drive change for the sector. Therefore, adapting to their desire to play a role in how their money is invested.

Accrutus Capital can help new business owners with less than 2 years trading history, no financials and no security. Offering non-bank working capital solutions where traditional bank finance is not an option.

Call Accrutus Capital 07 3184 9183 to discuss how to take advantage of fintech advances for small business.

DISCLAIMER

The disclaimer covers content, comments, responsibility, links, government and local laws, jurisdiction and communication methods. None of the contents on this website or blog should be construed as any kind of advice or recommendation. Nothing in it should be taken to constitute a statement that is intended to influence a person or persons in making a decision regarding any investment or financial product. This website or blog does not purport to be complete, accurate or contain all information which its users may require to make an informed assessment of whether to invest in any Offer listed through Accrutus Capital Pty Ltd.

Alternative lenders aren’t going away, they’re just misunderstood

Alternative lenders aren’t going away, they’re just misunderstood

by | Jun 22, 2016 | Non-Bank Working Capital

Alternative lenders are here to stay. Fast forward to 2018 and the Alternative Lending industry has matured and undergoing some consolidation across borders. This is an update on the 2016 view of the AltFi industry as it emerged from the global financial crisis. Lending was among the earliest segments of finance to be disrupted by the technology revolution currently sweeping the industry.

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