A major cause seems to be tightening competition. Banks are putting in sharper interest rates, possibly in an attempt to secure their market share. This price battle can be beneficial for an entrepreneur in the short term. Nevertheless, it is important to look beyond interest rates. Banks' renewed focus on SMEs is positive, but the structural benefits offered by alternative forms of finance remain as relevant as ever for a healthy and future-proof financing mix.
Unique value-added alternative financiers
Especially in a changing landscape, alternative financiers are proving their unique value for SMEs. Whereas a bank sometimes offers a 'one-size-fits-all' solution, the alternative market is characterised by a diversity of specialists, each with their own expertise. And that has advantages!
Speed and flexibility
One of the most valued features of non-bank financiers is speed of action. Thanks to efficient, often technology-driven processes (FinTech), a financing application can be assessed and approved within days. This is a world of difference from the sometimes lengthy processes at major banks. This speed enables entrepreneurs to respond immediately to market opportunities.
Focus on the business, not just the numbers
Alternative financiers often look at a financing application through a different lens. Whereas banks rely heavily on historical data and collateral, alternative parties have more room for the company's potential, the strength of its business model and the quality of its management. They understand that a company is more than its balance sheet and profit and loss account. This opens doors for companies that are less likely to be considered at a traditional bank.
A wide range of solutions
The world of alternative finance is rich and diverse. Think factoring to optimise working capital by advancing outstanding invoices. Think leasing to finance business assets without making a big call on liquidity. Or crowdfunding. This is not only a way to raise capital, but also to activate your network and create ambassadors for your brand. You can also think about direct lending, lending by specialised funds, often with more flexibility in terms and conditions.
Diversity
Diversity makes it possible to build a financing structure that seamlessly matches specific business stages and ambitions. It is no longer about finding one party to finance everything, but about cleverly combining different sources, also known as 'stacked funding'.
The future is hybrid
The recent move by banks is a sign that the funding market is coming of age. It is no longer a question of 'bank versus alternative', but of 'bank AND alternative'. A solid banking relationship can be an excellent foundation, complemented by the speed, flexibility and specialism of non-bank financiers.
As advisers, we at Xolv Finance always look for the optimal mix for your business. We help you find your way through the broad landscape of financiers and together build a robust financing structure that supports your growth ambitions. Because in today's dynamic economy, agile financing is not a luxury but a necessity.