What many businesses do not realise is that SWIG (founded 30 years ago next year) is arguably one of the UK’s first established alternative lenders, we started lending before the term even existed! But what exactly is this alternative market?
If you are a small business and want to borrow money, perhaps to recruit new staff or rent new offices or land, purchase machinery or to launch new products & services; the traditional route would involve a meeting with the local bank manager – if not relying on your own funds or family and friends. Following the 2008 credit crunch, high street banks needed to stabilise their capital and restrict some of the lending pipelines in order to reduce risk levels. Since this tightening, many SMEs have found they may not be approved for a traditional bank loan, perhaps through lack of a track record or insufficient security to offer. Others SMEs will only approach one lender and if rejected, may give up on getting a loan altogether. Some may not apply in the first place.
This tightening, combined with the advent of open banking and rise of fintech (financial technology) solutions has led to an influx of new alternative lending platforms over recent years. Peer-to-peer lending, reward/equity based crowdfunding and asset financing are just some of the “alternative finance” options which have emerged.
Whilst most of these alternative finance providers do offer a differentiated and positive service to customers, it’s worth being cautious of unregulated lenders, and lenders offering instant decisions with low headline rates. We have recently come across a client who has entered into an agreement charging for a ‘fixed cost of credit’ giving an effective APR in excess of 100%. It’s always worth looking beyond the headline rates at the other costs; early repayment fees, monitoring fees, arrangement fees and guarantee/security levels to name a few. SWIG Finance is a not for profit, FCA regulated responsible finance provider meaning that we adhere to a strict code of conduct.
Access to finance is crucial to growth and while banks remain the dominant source of finance, alternative finance options from the likes of SWIG can often offer small businesses more flexibility, an easy application processes and a relationship-based lending approach. SWIG can lend from £500 up to £100,000 in the South West, and £250,000 in Cornwall and the Isles of Scilly. In many instances when you’re bank can’t.
Get in touch to have a chat about how SWIG Finance may be able to help you with your growth ambitions.