Alternative finance (‘AltFi’) is a booming sector – but recent research suggests businesses’ lack of AltFi awareness costs the UK economy £20bn.
Tim Evans, Brand and Strategy Director of one of the leading lenders – Verus360 shared with BFS his viewpoint on the role of AltFi in UK’s funding industry.
Compared to bank loans, which often take months to be approved, AltFi funding can usually be accessed within days, or even hours.
This is thanks to processes being automated online – for example, using cloud technology to analyse applicants’ accounts and risk profiles. AltFi providers can calculate interest rates and make lending decisions far faster than traditional lenders, which can require lengthy paper-trails and face-to-face meetings.
AltFi finance providers are often younger, smaller set-ups – without the huge overheads of their traditional predecessors. This allows for a more flexible approach, plus less constrained lending criteria.
They also tend to be more client-focused, and likely to shape their products with borrowers’ needs in mind. Verus360, for instance, offers true flexibility. Rather than being tied to a fixed-term loan, businesses can borrow on a ‘pay-as-you-use’ basis.
Old-style finance firms can advertise impressively low headline rates – only to add various extra costs and service charges that can send the final cost soaring. A few AltFi firms, however, guarantee no additional costs beyond the price offered.
Traditional lenders often demand that borrowers use personal property (such as their homes) as security against loans. AltFi providers tend to be less concerned about this, with some lenders (Verus360 included) promising they’ll never ask for personal guarantees.
To find out more about Verus360’s finance, visit www.verus360.com