Exploring funding options beyond the big banks? Here’s what you need to know about alternative lenders—and how they could support your next stage of growth.
The big banks are reining in lending, making alternative, non-bank lenders an attractive proposition. But what are the pros and cons of accessing funding from a non-bank?
Access to capital is key when you’re ready to grow. Traditionally, that’s meant turning to the big banks—but tighter lending conditions are making it harder for small businesses to secure funding through the usual channels.
With banks now required to hold larger cash reserves, lending has slowed. While this strengthens the financial system, it can leave business owners short on options when they need a cash injection to fuel growth.
The good news? There’s another path.
Alternative lenders—like fintechs and online platforms—have stepped in to fill the gap. They offer faster, more flexible funding solutions tailored to the needs of growing businesses. But like any financial decision, it’s important to weigh the pros and cons.
What are alternative lenders?
Alternative lenders are non-bank financial institutions that provide business finance outside the traditional banking system. Think online lenders, specialist finance providers, and fintech platforms.
They offer products like:
- Short-term business loans
- Lines of credit
- Invoice financing
These options can help smooth out cashflow, fund expansion, or cover unexpected costs.
Pros of alternative lending
- Speed and flexibility
Online applications, streamlined processes, and less rigid criteria mean faster approvals—ideal when time is of the essence. - Higher approval rates
If your business is new, has a limited trading history, or doesn’t meet traditional bank criteria, alternative lenders may still say yes. - Tailored finance options
From invoice finance to revolving credit, these lenders offer products designed to meet specific business needs.
Cons of Alternative Lending
- Higher costs
Interest rates and fees can be steeper than those offered by banks. It’s important to understand the total cost of borrowing. - Less regulatory protection
Business loans from non-bank lenders may not be covered by the same consumer protections, leaving you more exposed if things go wrong. - Personal guarantees
Some lenders require you to personally guarantee the loan—putting your own assets on the line if the business can’t repay.
Finding the right fit for your business
A solid funding strategy starts with understanding your cashflow and capital needs. While we don’t provide financial advice on specific lenders, we can help you assess your position and build a plan that supports your growth goals.
Need help understanding your cashflow or planning for growth? Let’s talk about how to build a funding strategy that fits your business.
About Pathfinder Solutions
Pathfinder Solutions advisory team members have either owned or managed businesses, or are investors themselves, so we know first-hand the challenges you face in your world.
Sure we’re Accountants, but the best solutions in business come from focusing on more than just the numbers. Our real-world business experience delivers just that.
