SME Financing Foundation publishes a report on the alternative finance market every year. In 2020, nearly 40,000 entrepreneurs will make use of alternative financing. That is 25% more than the year before. Despite the coronavirus crisis, entrepreneurs are not reluctant to apply for financing.

What is Alternative Financing?

Alternative financing is also known as non-bank financing. So the name actually says it all. This is financing without bank intervention. There are various ways of alternative financing. Think of factoring, financial leasing, direct lending and crowdfunding. Financing through family or friends also falls under alternative financing.

Growing simply costs money

It is a fact that more and more growing entrepreneurs are opting for alternative financing. Every year, we see an increase in funding requests via an alternative financier. In the study, we also see that the largest financing need is below €250,000. However, 87% of bank loans are above €1,000,000. We can conclude that if you want to finance less than €1,000,000, you cannot go to the bank.

A growing company simply costs money. Think of hiring new staff, investing in sales and marketing, or financing a major assignment. These are all times when a growing entrepreneur can make good use of financing.

We've highlighted the main benefits of alternative financing for you here. This gives you a better idea of what an alternative financier can do for you.

Appropriate financing for every entrepreneur

The alternative financiers have jumped into the hole that the bank has created. A characteristic feature of these financiers is that they respond very well to the needs of the entrepreneur. Even when the market changes, they are able to switch quickly.

The application process with alternative funders is quick, easy and personal. With bank financing, it can take a long time and you have to provide a lot of documentation.

Alternative financing is a broad market. For example, there are parties that pre-finance your invoices or platforms where you set up your application and attract investors. But also consider online providers to get financing quickly.

Are you looking for an alternative financier? Then check the terms and conditions of each party. Most of them have minimal requirements that you must meet to qualify. In general, every entrepreneur can come to a form of alternative financing!

Fast processing of your alternative financing

Most alternative financiers are fintech companies. These companies are using innovative technology in the financial sector. They use the technology at the right times in the process. For example, alternative financiers provide an easy and user-friendly way of financing. No hassle.

Alternative funders are able to process their data quickly and efficiently. They are able to adapt quickly to changes in the market and respond perfectly to customer needs.

In principle, entrepreneurs do not notice the technology itself. In fact, it should lead to greater ease of use. One solution is to quickly apply for your funding or place it on a platform. Thanks to these technologies, it is possible to pay in a flexible way. For example, based on your turnover, more about that in the next point.

Flexible and focused on the needs of the entrepreneur

When entrepreneurs need financing, they want to act quickly. It is nice if financing is then arranged in the short term. In addition, they like it when someone thinks along about the most appropriate financing.

Alternative financiers are flexible. They have fixed processes, but they always look at the entrepreneur's situation. They can do this because there is no bureaucracy within the sector. Just like you might be used to from a bank. Alternative financiers check whether the financing suits the entrepreneur and the company. It is precisely that bit of flexibility that is an added value for the entrepreneur.

For a growing company, it can be interesting to pay flexibly. For example, by paying off based on turnover. It is expected to grow, but you are not there yet. A percentage is agreed that you will pay. As soon as turnover increases, more is also repaid. For example, there are various options to offer flexibility to the entrepreneur.

Alternative funding continues to grow

Alternative financing will be just as big as bank financing. But for amounts under €1,000,000. It can even get much bigger. This is expected to happen within 5 years.

Entrepreneurs are looking for a flexible and accessible way to arrange financing. Alternative financiers are responding to this by continuously listening to the entrepreneur's wishes. This allows them to quickly adapt to the needs of the market.

Direct lending popular

Direct lending comes closest to a bank loan. And by that, we mainly mean the way of borrowing. You borrow the desired amount, pay interest on it and repay it in the agreed time.

The difference between a bank loan and direct lending? You have to submit a lot of documents to the bank. A direct lender only asks you for your bank transactions. In addition, most direct lenders can pay out your loan within a few days. At the bank, this can take weeks to months.

Direct lending is a good option if you need financing quickly. At Swishfund, you are eligible for a business loan if you have been registered with the Chamber of Commerce for at least 12 months and have a minimum annual turnover of €50,000. You start the request? You can easily do that online.

Do you want to know more about financing through a direct lender? We have the four main benefits lined up for you.