Genie Lending’s blog provides helpful information and advice about business loans and alternative finance methods. Learn more today.

How to Pick a Loan Broker

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Choosing a business finance broker is a difficult task, because from the outside they all look the same. Whether you’ve been trawling the web looking for a loan broker or you’ve met one in person, how can you be sure they are trustworthy? When you’re making a big financial decision you want to know you’re receiving professional advice and getting the best possible deal for your business.

A broker understands the evolving world of business finance, and has positive relationships with a range of lenders. They can also introduce to new opportunities you may not have considered, including a variety of alternative finance solutions.  With the right loan broker, you could simplify your options and make sure you choose a competitive finance deal which is right for you. The term loan broker can be quite daunting for many people, especially if it’s the first time they are applying for long or short term finance. Some bad apples in the industry may have given loan brokers a bad name, however as specialists in financial solutions, they can do all the work for you to find you the best deal. Whatever you need a loan for, take a look at why you should consider a financial broker. Read more →

Is it Getting Easier to get a Loan?

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The UK economy is very volatile at the moment, which has a direct impact on the banking sector. With the instability surrounding Brexit, lenders are generally tightening their strings and restricted the amount of finance they’re willing to give to British businesses. Inflation has also been rising which is another concern, as higher household costs and business expenditure often leads to an increase in debt.

High street banks have been reducing eligibility for some time, especially to new businesses in desperate need of capital. This has led to a booming alternative finance market, offering what banks would deem ‘high risk loans’ to start-ups and businesses without years and years of accounts. So, is it getting easier to get a loan? The answer depends which lender you’re applying to.

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Do I Need a Commercial Mortgage?

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If you’re looking for a new premises for your business, whether it’s an office or a hotel, it’s classed as a commercial property. Purchasing a commercial property requires a commercial mortgage, which isn’t always easy to obtain. This is why people who aren’t eligible for a commercial mortgage or don’t want a large financial commitment can choose to rent a business property instead.

If you need a commercial property it’s important to weigh up the pros and cons of both renting and buying. It’s not quite as simple as buying or renting a house and there are other business concerns to consider.

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How has Brexit Impacted the UK Economy?

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Brexit negotiations or speeches are hardly out of the news these days, but how much has actually changed since the referendum? It will be some time yet before an agreement is made and the UK officially leaves the European Union, however we’ve already seen some significant changes in the economy and how global businesses view the UK trade.

It’s hard to give an overall view of whether in general the UK economy has improved or got worse since we started the process of divorcing the EU. Many reports focus on the value of the pound but there is more to measuring the economy than sterling markets. The state of the economy can affect house prices, employment levels and the risk factor for banks to lend money. If business growth slumps because of a lack of access to finance, this could also have disastrous consequences as we exit the union.

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Reasons Why you May Not be Eligible for a Business Loan

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The majority of business owners require a business loan at some stage. It may be finance for a property refurbishment or extension, or capital to get the business off the ground and invest in machinery. Access to funding isn’t always simple though, and the eligibility for bank loans is becoming stricter.

High street banks have a set of tough criteria for businesses who apply for a loan. Small businesses have a huge struggle with traditional business loans, and with a long application process it’s extremely frustrating to be turned down. It’s important to know what lenders are looking for, and whether it’s worth processing an application for a business loan. Here are some common reasons why your company may not be eligible for a business loan from a high street bank.

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How to use Leverage and Debt as an Investment Tool

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Do you think that debt can ever be seen as a sign of financial power and strength? Surprisingly, it can. Leveraging debt can actually be a good investment tool when executed correctly – when borrowing to invest and increase your income.

Before taking on a commercial outlook, let’s first look at personal debt and how almost everyone uses it in everyday life. Most people have a mortgage, a car on finance, mobile phone contracts or credit cards, for example. We use these types of purchasing to manage our own personal cash flow or get a head-start. It would be impossible to have all of these things at once without spreading out the payments. Read more →

The Pros and Cons of Bank Loans & Alternative Finance

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Businesses are faced with a choice when it comes to funding; they can apply for a bank loan or look for less conventional forms of finance. With such a huge choice of business loans and the alternative finance sector booming, it can be difficult to know which path to take. So why are non-traditional finance solutions proving so popular? They are easier to access and often deliver faster payments than the banks. Yet both types of lending have advantages and disadvantages, so it’s important to understand the terms and with a greater supply of finance than ever before, choose what’s right for your business.

We’ve put together this useful short guide to the pros and cons of alternative finance options and traditional bank loans.

Alternative finance options

Because there are so many different types of alternative finance available, it is hard to group them all together and differentiate the pros and cons. However here are some general points to note:

  • Speed and efficiency – applying for an alternative finance loan is quick and efficient compared to the long process at high street banks. If time is not on your side, an alternative finance provider can help
  • Specialised providers – while national banks work with a wide variety of businesses, many alternative finance providers have specialisms. This means they will understand your business model and needs better than a general financial institution
  • Tailored options – banks offer standard loans and commercial mortgages, while the alternative finance sector provides a range of solutions for all types of SMEs. Find something ideal for your finance needs, from asset finance to a merchant cash advance. You may also be able to benefit from flexible repayment options.

The main downside to using this type of funding is the higher level of risk. Instead of borrowing from a large financial institution which is fully regulated and protected, you will be lending from individual investors or a group. Also, the risk is high on the side of the investors which means interest rates can be higher with some products.

Bank loan options

  • Safe and predictable – a bank is the first point of call for many people to apply for a loan. It’s a safe place and you know the financial institution is accountable and credible.
  • Fixed interest rates – banks have the power to offer slightly lower interest rates than other lenders for certain products, and fixed interest for the loan term. Some alternative finance providers will try and match the interest rates of the banks but it’s not always possible as it’s down to individual lenders.

While a bank loan seems like a great choice, the main con is that the majority of SMEs and start-ups will not be eligible to apply. There is a long application process with lengthy paperwork, and businesses usually have to be established and profitable with the support of historical accounts. To get a business bank loan you’ll probably also need strong credit and capital to secure the loan.

Want to find out more about your alternative finance options? Contact our commercial finance brokers today.

Why are non-Bank Loans Gaining Popularity?

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SMEs are likely to need financial support when starting up or in the first few years of trading – yet it’s at this crucial time when high street banks often reject their loan applications. Banks and financial institutions have tightened their lending in the uncertain economic climate, and because of the higher risk of lending to start-ups and SMEs it is often impossible to secure a business loan.

Some businesses are set back after being rejected from a bank, and give up on finding the funding they require. Nevertheless others keep trying, and many have found suitable financial solutions from the alternative finance market. Non-bank loans are gaining popularity firstly because SMEs are being pushed into this type of lending by the banks who refuse to lend to them. Secondly, alternative finance providers can provide a wider range of finance and sometimes match the interest rates of high street banks.

What are the reasons for SMEs being refused a bank loan?

In the Close Brothers report ‘Banking on Growth: Closing the SME Funding Gap’ which is based on a survey of 1,000 financial decision makers in UK SMEs, the main reasons these small enterprises were refused finance were:

  • Cash flow not strong enough
  • Banks not lending to SMEs at all at this time
  • Not enough capital
  • Business plan not strong enough

With many high street banks not even considering SMEs for loans, or having extremely strict criteria, it is easy to see why other forms of lending have grown in popularity.

Non-bank loans: challenging traditional lending

Thankfully for start-ups and SMEs, new products have become available on the alternative finance market. Peer to peer lending, crowdfunding and asset finance allow small businesses to access vital capital in order to grow and succeed. These “non-bank loans” and unconventional forms of finance are acting as a lifeline to British start-ups which wouldn’t be able to trade without a significant cash injection.

But it’s not just snubbed SMEs who are turning to alternative finance – the market is thriving and supporting a range of businesses, investors and individuals. In 2015, it grew 84% according to Nesta, to £3.2 billion. Many alternative finance providers offer a multitude of advantages to small businesses in addition to being more accessible. The SME-friendly loans are forms of fast cash – sometimes applications can be approved and the money transferred the same day. Some forms of finance can also offer lower interest rates and more flexible repayment terms because you’re not tied to a bank.

Want to find out more about non-bank loans? Speak to our experts at Genie Lending today.

How Borrowing Money can Be the Best Decision You’ve Ever Made

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Debt is often seen as a bad thing to acquire, but in many situations it can actually be beneficial to borrow money. For example, lots of people have a mortgage or a car on finance – this is considered manageable debt as long as you can afford the long term repayments. Also, if you’re borrowing money in order to make a profit in the future, then surely this makes business sense? Read more →

How to Buy a Commercial Property without a Bank Loan

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If you’re looking to buy a new commercial property or renovate the commercial premises you currently occupy, you might think a business loan from the bank is the only way. However, high street banks are not the only places which can support your commercial property investments.

Finance is a barrier for many businesses, but a lack of cash shouldn’t hold you back. In fact, the majority of companies wouldn’t have achieved success unless they borrowed money to grow. In order to expand and flourish, you require a funding solution which allows you to purchase the type of property you need – shops, retail units, farm buildings or industrial warehouses.

So is it really possible to buy a commercial property without help from the bank? Yes.

Commercial mortgages from the high street banks

A commercial mortgage is a bank loan which is intended to be used for purchasing a business property. A general business loan will have lower lending limits than a commercial mortgage. This type of mortgage differs from a residential mortgage, and you will likely need a large cash deposit as commercial mortgages tend to cover 70% of the property price.

As always, when borrowing from high street lenders the level of risk is measured precisely and if any factor falls slightly outside the risk profile, the mortgage application will be refused.  It is becoming very difficult to obtain any loan from a bank, especially a mortgage.

Other options to Buy a Commercial Property

Almost all businesses require some sort of premises, whether it’s an office or a factory. If you need to purchase commercial property for your business, or you want to buy a business which is for sale such as a B&B or a restaurant, then you don’t always have to rely on the high street banks.

The finance market has changed drastically over the last decade, allowing loan brokers and alternative finance providers to offer a range of alternate solutions. They explore funding streams to offer businesses commercial mortgages to companies that would typically get refused a loan from the bank. Alternative finance providers offer tailored solutions to fit your business, whether it’s development funding, a bridging loan or a traditional commercial mortgage.

If you need to purchase a commercial property and would like to discuss the options available to you, call our business finance managers on 012020 868843.