By David Cardoso, Junior Underwriter at Albatross Lending Group
For many SMEs, the phrase business financing still suggests a conventional bank loan. In 2026, if you’re an SME and assume your bank will be your first stop for finance, you’re already starting from behind. The lending landscape has shifted, not temporarily, but fundamentally. Since the 2008 financial crisis and, more recently, the Covid‑19 pandemic, banks have steadily reduced their risk appetite. They’ve layered on more documentation, more compliance, and more rigid, tick‑box processes that simply don’t reflect how real businesses operate or the pressures they face.
More and more SMEs are now turning to non‑bank, alternative lenders, the only ones able to move with the speed, flexibility, and commercial understanding SMEs actually need.
From my seat in the risk team, I see the same story play out every week. Strong businesses with genuine potential get stuck, not because they’re unviable, but because their bank can’t (or won’t) take a forward‑looking view. That’s exactly where specialist and asset‑backed finance steps in.
Asset‑Based Lending
Asset‑based lending has become a lifeline for companies with strong balance sheets but limited liquidity, businesses with capital tied up in stock, equipment, or other operational assets, or those feeling pressure on their working capital. Using assets such as receivables, inventory, machinery, or intellectual property as collateral, SMEs can access funding lines that often go far beyond what unsecured lending would ever allow. This makes ABL particularly effective for manufacturers, wholesalers, and operationally intensive sectors where assets form a meaningful part of the business.
The real engine of modern ABL is property backed debt.
Property gives lenders something banks increasingly struggle to offer – certainty. A commercial unit, a mixed‑use building, an investment property, even a director’s residential asset, these are tangible, stable, and straightforward to value. They allow lenders like us to take a projection‑led view of the business rather than being tied to last year’s accounts. That’s essential for SMEs that are growing, pivoting, or recovering from a challenging period.
Here’s the part most SMEs never hear: your property is often the cheapest, most powerful source of capital you have — and most businesses barely use it.
Property‑backed ABL can unlock:
- Larger facilities than unsecured lending ever could
- Faster decisions (days or weeks, not months)
- Flexibility around trading volatility
- Longer repayment horizons
- Funding for stabilisation, restructuring, or growth
From an underwriting perspective, the process is refreshingly straightforward when the basics are in place. With those pieces lined up, property‑backed ABL becomes one of the most efficient ways for SMEs to access meaningful capital.
It’s no surprise that construction, manufacturing, hospitality, and real‑estate‑linked businesses are leaning heavily into this type of funding. They’re asset‑rich but often cash‑constrained and property‑backed ABL bridges that gap better than anything else in the market.
Invoice Finance
Invoice finance is a straightforward way for SMEs to unlock cash tied up in unpaid invoices. It’s most effective for businesses with long payment terms or seasonal cash‑flow gaps. By advancing a percentage of receivables, it provides predictable liquidity without taking on long‑term debt.
Underwriting focuses almost entirely on the quality of the debtor book. Clean billing, diversified customers, and consistent payment behaviour are the key drivers of approval and pricing. Poor debtor discipline, disputes, or customer concentration will weaken an application.
Invoice finance does introduce fees and, depending on the structure, customer visibility. But for SMEs with strong receivables, it remains one of the most reliable and scalable ways to stabilise cash flow.
Crowdfunding
Crowdfunding has transformed how early-stage businesses and consumer brands access capital. Campaigns that offer equity, debt, or rewards can simultaneously fundraise and build market engagement, attracting supporters who often become customers.
Assessment of crowdfunding-backed businesses focuses not only on financials but also on demonstrated traction – pre-orders, community interest, early revenue, or a compelling value proposition. Successful campaigns require careful planning and strong communication, and SMEs should be aware that equity-based models will dilute ownership. Still, for the right business, crowdfunding can provide both capital and momentum.
Crowdfunding works best for early‑stage or consumer‑facing businesses that can demonstrate clear market interest. Equity, debt, or reward‑based campaigns can raise capital while also validating demand, but only when there is genuine traction behind the business.
From an underwriting perspective, the focus is on evidence of engagement: pre‑orders, community support, early revenue, or a compelling value proposition. Without these, crowdfunding is unlikely to deliver meaningful results.
It’s important to note that equity crowdfunding dilutes ownership and requires significant preparation. It is not a shortcut to funding, but it can be effective for businesses with a strong story and an active customer base.
Peer‑to‑Peer Lending
Peer‑to‑peer (P2P) lending provides SMEs with fast, data‑driven access to capital. These platforms rely heavily on financial transparency, so clean, up‑to‑date accounts and clear explanations for anomalies are essential.
P2P is most suitable for businesses that lack hard assets but have stable trading performance and predictable cash flow. Pricing varies with risk, and facility sizes are typically smaller than property‑backed or ABL solutions.
When the numbers are consistent and the business case is clear, P2P can be an efficient alternative to traditional unsecured lending.
Guidance for Brokers
The strongest applications come from brokers who prepare clear, organised information and match the business to the right product. Lenders look for:
- Clean management accounts
- Realistic cash‑flow forecasts
- Accurate debtor and asset schedules
- Clear explanations for irregularities
- Defined security packages
Good preparation reduces underwriting time and improves terms.
Guidance For SMEs
Lenders aren’t looking for perfect trading histories- they’re looking for control and clarity. SMEs can improve outcomes by:
- Keeping financials up to date
- Having a defined and structured business strategy
- Being transparent about challenges and forthcoming with information
- Understanding the value and condition of their assets
- Presenting a clear plan for how the funding will be used
Projection‑led lenders, including Albatross, can support businesses with strong forward potential even when historical performance is uneven. This approach is increasingly important for SMEs that are growing, restructuring, or adapting to new market conditions.