Top tips to find the best finance provider for your business

Claire Hogarth09/Οκτ/2015International Trade

The lending market is flooded with everything from traditional bank options and equity sources to new alternatives including peer 2 peer lending, Crowdfunding and specialist companies. However the range of choice available is not always made clear to the very businesses that need them most; UK SMEs.

A Government report stated, ‘SMEs are not aware of the existence of these alternative sources of finance. This is a market failure, of imperfect information, resulting in SMEs that are viable loan propositions not receiving the finance they need.’

Alternative finance referral system

In order to combat this, high street banks have been tasked with referring their unsuccessful applicants to alternative finance providers. This will not only increase awareness of alternative options but allow many more SMEs to receive the financing they need.

However, this referral system could be understood as placing alternative financiers as a second rate option, simply picking up the slack from the banks and only necessary as a last resort. This view significantly undermines the innovative and disruptive role alternative financiers are playing in the current SME lending landscape. Instead of being ‘secondary’ to the banks, alternative financiers are substantial and serious rivals, providing SMEs with an increased level of choice.

How to choose the right finance option?

To make a decision in this competitive environment, it is important to go back to what is important to your core business. The International Trade Centre in their ‘How to access Trade Finance Guide‘ commented that, when choosing a finance provider, the ‘attentiveness to the needs of its clients and quality of its service should be paramount’. It also highlights that an ‘exporting SME can have a long-term relationship with its core bank, and a transactional approach with one or two other providers whose specific services match specific needs of the SME.’

This is a particularly important consideration and leads onto our first top tip:

Reflect on if the finance provider

is a specialist in your area of business

Your bank, whilst holding your accounts and allowing you to transact on a daily basis, may not be able to offer services tailored to your sector, when it comes to the provision of finance. For example, an alternative finance institution specialised in trade may be better positioned to understand a business’ trade needs than a large corporate bank who provides general financing options for all sorts of private and corporate clients. A finance provider specialised in trade will understand the challenges the business faces and therefore be more likely to offer appropriate solutions, be that suitable credit terms or a flexible repayment schedule.

This approach to finding finance can save you a lot of time and effort, as the solution you seek is already operating as part of the specialist’s service. The specialisation is coupled with an increased service level as, whilst a bank may regard an SME as a small and relatively low-value client, a specialised provider can recognise the value and provide the time and attention needed to find the ideal solution.

Our top tips

Aside from this key differentiator, our other top tips when choosing a finance provider include:

  • Whilst assessing how much credit is available, it is also important to consider how easy it will be to access the finance after approval. Having a large credit facility is only valuable so long as it is accessible to your business.
  • If you trade overseas, how does your credit provider deal with the currency exchange? It is important to ask how fluctuations in the currency market may affect the price you are charged.
  • Another aspect is the level of service your business can benefit from. Can the finance provider tailor the product to your business model or are you a round peg forced to fit into a square hole?
  • Consider not only how long you have to repay but also if they can be flexible for quicker than expected repayments. Changes in your business may allow for early repayment and you need to have a finance provider who can adapt to your situation and a credit facility that does not charge extra for alterations to the payment schedule.


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Written by Claire Hogarth

Marketing Executive at Ebury. English Literature graduate from the University of York and a motivated professional.