It’s common knowledge that business owners need to cultivate a good relationship with their bank if they hope to succeed in the long term. What many entrepreneurs aren’t aware of, and need to know, is that they might well need another financial relationship to secure their competitive edge. In cash flow situations that banks aren’t ideally equipped to handle for their clients, they’ll often refer business owners to an alternative financial institution, like Fifo Capital.
These types of institutions specialise in working with smaller enterprises to tackle short-term cash flow problems in ways that are difficult or untenable for traditional banks. By understanding what benefits these services offer, and how to use them, you can make your small business far more financially secure and competitive.
Traditional business loans take a notoriously long time to approve. Depending on the type of loan, it could take anywhere from weeks to months to actually get access to the funds you need. In many cases, that’s prohibitively slow. Businesses need to get their hands on their funds as quickly as possible if they want any hope of smoothing over unexpected cash flow problems without negative impact to their business. Even if they’re looking to finance growth rather than deal with a shortfall, slow turnaround can easily mean missing a critical window of opportunity entirely.
Alternative finance institutions like Fifo Capital specialise in precisely these cases. New customers typically get their applications processed within two working days, while existing clients can count on a 24 hour turnaround. This makes small businesses agile enough to respond to problems and opportunities practically instantly, giving them an enormous competitive edge over businesses that rely wholly on traditional financing.
Small secured loans
Banks generally don’t generally like to issue small loans. Small loan amounts generate smaller returns, and for large institutions those returns often simply don’t justify the cost or the associated risk. Small businesses that only need small amounts of funding are then left to work with more expensive unsecured loans and lines of credit. Effectively, that would mean small businesses are forced to pay more for their financing than their larger competitors.
Alternative finance institutions are set up differently to help address this problem. They allow clients to quickly and easily secure a small loan against a relatively minor asset, for example by using invoice financing. This is important, because secured business loans carry far less risk for the lender than unsecured loans do. As a result, they tend to be more affordable, giving small businesses more financial freedom to compete against larger businesses.
One-to-one high touch relationships
At the beginning of a banking relationship, financial institutions will often have entrepreneurs work with an expert financial representative to make sure their needs are met. Unfortunately, those needs have a tendency to change. Small business clients normally don’t have access to those experts later in the relationship, and need to contact and work with a call center representative to make changes later on. The representative they’ll talk to then won’t have prior familiarity with their case, and may or may not have any specific industry knowledge that can help them to guide the client.
At Fifo Capital, on the other hand, clients work with the same dedicated representative throughout the relationship. That means the person they’re talking to is already familiar with their case, and develops a better and more nuanced understanding of the business over time, allowing them to provide the best possible solutions for their client’s particular situation. This relationship is also a part of how these types of institutions can quickly make judgments about loan applications, and how they can ensure that the businesses they work with survive and thrive.
High rates of approval
Few things are more irritating than waiting for a response to a loan application for weeks, only to have it denied. Fortunately, alternative financing institutions not only offer much faster response times, but also have a higher tendency to approve applications. What allows them to do this without taking on unsustainable risk is that strong client relationship.
Instead of only relying on simple metrics like credit scores, clients and their businesses are analysed and evaluated as a whole. Representatives then don’t just decide whether or not it will work out, but work together with their clients to ensure their long term success.
Alternative financing institutions rely on these strong long-term symbiotic client relationships. These allow them to confidently offer the fast short term cash flow solutions that small businesses need to manage their unexpected budgeting issues. Moreover, it allows small business owners to access financing and experienced financial experts quickly and easily, making them much more competitive against larger and better established industry rivals.