High-street bank vs Alternative lender
Banks are still the cheapest source of business debt for companies that fit their credit policy. Alternative lenders — challenger banks, independent financiers, debt funds — exist because that policy excludes a great many viable businesses. The right answer depends far less on preference than on whether your numbers, security and timing fit a bank box.
| Criterion | High-street bank | Alternative lender |
|---|---|---|
| Typical cost | Lowest available margin over base | Two to eight points higher, sometimes more |
| Speed to funds | Four to twelve weeks | Days to four weeks |
| Security appetite | Debenture plus property; conservative valuations | Will lend against receivables, stock and plant |
| Covenants | Tight, tested quarterly | Looser or none on smaller facilities |
| Trading history | Two to three profitable years | Will consider shorter history or a recent loss |
| Relationship | Broad banking relationship expected | Standalone facility, no cross-sell |
If you are profitable, have two or more years of clean filed accounts, hold tangible security and can wait, the bank will almost always win on price. That advantage compounds over a five-year facility and is worth the extra process time.
Banks are also the natural home for long-dated debt: commercial mortgages, owner-occupier property purchases and asset finance on standard equipment.
Speed has a value. If a facility completes six weeks earlier and lets you take a contract, buy stock at a discount or close an acquisition, a higher margin can be the cheaper commercial outcome.
Alternative lenders also underwrite things banks discount: a growing sales ledger, specialist plant, a recent restructuring, an unusual sector, or a cross-border group. They price risk rather than refuse it.
Run both in parallel. Prepare one information pack, approach a small number of banks and a small number of specialist providers at the same time, and compare full terms rather than headline rates. Competitive tension is the single most reliable way to improve pricing.
Use a bank where you fit the box and can wait; use an alternative lender where speed, flexibility or asset-based capacity matters more than the last two points of margin.
No. Banks routinely refinance well-performing facilities originally written by specialist lenders once a track record exists.
Business lending is largely unregulated in most jurisdictions, but reputable providers are established, funded institutions. We only approach providers we know and have transacted with.
Not sure which route fits? Describe the requirement once and we will structure it and approach the providers whose criteria match. No upfront fees — charges are due only once funding is in place.
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