In 2018, and in previous years, cash flow continues to be one of the primary problems experienced by small businesses in Australia. One reason for this is that many small businesses find it difficult to secure traditional finance. If you’re a small business owner and have cash flow challenges, you’ve probably experienced this for yourself and may have wondered whether there are any potential solutions outside those offered by traditional lenders. The good news is, alternative finance is available here in Australia.
Alternative finance overview
But what is ‘alternative finance’? The short answer is that it is an umbrella term for finance facilities that are available for businesses and consumers outside the traditional finance system (i.e. Banks)
It is found that the demand for new alternative finance increased 130% in 2017, compared with the same period the previous year
Types of alternative finance
Just as there are a range of traditional finance options, so too are there a variety of alternative finance options to suit different circumstances. Two of the most common, and the two are invoice financing and peer-to-peer lending.
Invoice financing is the practice of selling outstanding invoices to investors. It has been gaining popularity among small businesses in Australia due to the low associated fees and speed with which funds can be obtained via this form of financing. Find out more
Peer-to-peer lending is the practice of loaning funds without the use of a traditional financial institution. It too has been gaining popularity in Australia, with individuals and businesses finding it attractive because it’s a more efficient way of obtaining finance.
Check out our article for more information about the differences between traditional and alternative financing. And if you’re interested in exploring alternative finance for your business, I also recommend you read our article on Australia’s alternative finance scene.