What are Some of the Alternatives to High Street Banks?

high street banks

What are Some of the Alternatives to High Street Banks?

03/11/2020Accounting Issues , Budgets & Other

People holding business bank accounts are now distancing themselves from the customary high street banks for obvious reasons. A lot of things have brought about this decision, but one of the main reasons is the lack of innovation and bad customer care. A poor saving rate is another major reason.

If you are running a business or a start-up, you’re least bothered about the banking policies and more into savings. Make your processes and transactions as simple and handy as you can.

You don’t have to bow down to all the incompetent services offered by high-street banks. Why not go for more ‘challenger banks’? If you’re someone who loves brand loyalty, then it’s the only right option for you. According to a popular opinion, people don’t generally recommend the banks they opt for their services. With current account switching services, switching to another bank is easier than you think. If your bank is not part of the new scheme, turning to a new bank/ new banking system is always a good idea. 

Give Credit Unions a Try

If you’re looking forward to taking up a credit union, know that there are about 450 unions in the UK. A credit union lets a shared community borrow money from each other. They’re basically owned by different members and each community member has its own share. Let’s dig up further in credit unions. Credit unions normally extend their support to small businesses, which makes it possible for small businesses to be a part of the group as well.

So how do credit unions work out? Since a credit union is run by all the community members, there’s no chance of a shareholder. They are volunteers elected by the membership. Any surplus profits are used by the credit union for its growth.

Give a try to friendly societies?

Cash overview or money survey are some high-street banking options. Friendly societies are like credit unions. These offer multiple scopes of items including investment accounts and insurance.

Find Asset Based Lenders

Asset-based lenders usually rely on lending money against your business. If you own a factory, plants, or machinery; this will be based on stock finance or invoice discounting. If the lender is a more ambitious kind of a risk-taker, he may further offer you a conventional loan.

Mainstream lenders often lend more money on different terms to the banks. Banks have a protected devised policy that they cannot bend because of the risk factor. However, you can find plenty of people ready to give you money depending on their hunger.

high street banks

 

Tier Unsecured Lenders Comes To Rescue

Second-tier unsecured lenders will probably extend the same kind of loans that mainstream banks offer. However, they will take more risks for you. This enables them to lend to those businesses that pose more risks.

Mainstream banks do not provide you with loans on your terms with elevated risk factors. They also offer their services without any security or guarantees on your liable assets. But, as the risk is higher, their interest rate will be higher too and their repayment plan is shorter. A business will need to demonstrate a strong track record of cash generation for eligibility.

high street banks

What about Private Equity or Venture Capital Funders?

Private Equity/Venture capital funders often fund businesses. They deal with those businesses is simple. They always look to expand and scale more quickly. So instead of loading up the business with loans that require repayment in a narrow time frame, these types of lenders will give you cash in exchange for a share in the ownership of your business.

Reach Out to Capital Funders

If you are expanding or buying another business, venture capital funders might become your borrowing option. They are constantly looking to expand your business. When they have a shared interest in your business, it sells at a way higher price after some time.

The idea of Charity Banks

What if the lent money is from a charity bank? You can find one in the UK which is regulated and registered as a charity. These operate like regular banks. The only difference is that you’ll have to serve the community as a result of the money received. So lend for your benefit, and serve the community as well. Charity banks often use investment and other deposits to fund charities and other social causes. It’s not a full-fledged operating bank, but you end up with these because of the rates offered by them. 

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Ethical banking for everyone

According to a report from 2010, UK consumers save a huge sum of £19.2bn using the channel of ethical finance lenders. These ethical financiers will give one prime benefit that helps you become a part of something that has a positive social and cultural impact.

Islamic Banking System is Completely Interest-free

Yes, you heard it right the Islamic banking system will give you the facility of interest-free repayments. Islamic banking means that you don’t have the burden of paying the interest rates on your loans, but you have to give a reason and follow the bank’s policy to maintain the code where the borrowed money is being used. They also provide business grants, but you have to layout your business model for the loan. Also, the bank addresses people from all faiths.

high street banks

Explore peer to peer lending options

Peer-to-peer loans (P2P) is a new alternative to high street banks. P2P websites are running where you can borrow loans from other consumers. It is a platform where consumers lend each other money. To find people with plenty of money to spend lending money to the people who need that money. You can find plenty of online peers to peer platforms including Zopa, Ratesetter, Quackle, etc. to name a few.

A relatively new alternative to high-street banks, the unique point of peer-to-peer loans (P2P) is that the websites that offer them allow borrowing between consumers. Companies that specialize in peer-to-peer lending include Zopa.com, Yes-Secure.com, Ratesetter.com, Funding-circle.com, and Quackle.co.uk.

Pawnbrokers as a last resort

You should put these kinds of lenders way down your list of potential money borrowing options. They usually operate in a simple and conventional way where you can get the loan facility by offering your personal belongings as a pledge. They charge up to an average loan rate of 140%.

Security is a big concern

With all the recent news about data intrusions and security related issues with high street banks, you might be thinking about security and wondering about the safety of mobile and online banking. Security is the key priority for banks when they consider extending their online banking services. Usually, banks use “Pentagon-grade” encryption. In addition, they use other associated technologies and firewalls.

All these systems require a frequent upgrade protocol. So bank regulators have to provide you with security upgrades from time to time. This will give you the confidence and peace of mind that your money isn’t going anywhere.

high street banks

Choose the Right Option

There are multiple options and platforms available in the market. If you are aiming for investments and business loans you have to go to the right option and read about the policies of online banking and their loan options. The right company will comfort you by providing multiple customizations and options. You will be surprised by the options an app will present to help you conduct your business seamlessly.


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