Finance can be available either on a secured basis (typically against property), or unsecured where a lender fundamentally is reliant on the borrower repaying from their resources, with no fall back on security; should the borrower be unable or unwilling to repay.
The alternative lending market can, however, provide what may be referred to as alternative commercial finance.
Probably the most common of these are: Factoring, Invoice Finance, Single Invoice Finance and Asset Finance – which fall somewhere between secured and unsecured transactions.
The lender provides finance against the monies owed to the customer by its clients (known as Trade Debtors). Can lend up to 85% of the invoice value immediately, and interest is paid on the amount borrowed and a monthly service charge is also paid.
Similar to Factoring, the primary difference being that the customer will continue to chase its clients for payment, and as such is cheaper.
Single Invoice Finance
Similar to the two above, but provided by some lenders where, perhaps, there is a larger single invoice and the client doesn’t want a full service but wants to raise monies on a single or several specific invoices.
Raising finance for the purchase or refinance of assets such as vehicles, machinery, computer equipment. Payments can be monthly, seasonal and if required with a bullet payment at the end to reduce the monthly payments. Different types of Asset Finance are available including buying the assets over a period of time or renting them.