Funding Alternative Invoice Finance
Funding Alternative is an independent invoice finance provider with facilities starting from around £50,000. They position themselves as an alternative to bank funding for SMEs, offering invoice factoring and discounting with the flexibility and personal approach that independent providers are known for.
Funding Alternative is an independent UK invoice finance provider offering factoring and discounting from around £50,000, with advance rates around 85% and service charges from 0.65%.
More detail + scope
Summary
Funding Alternative is a bank-independent invoice finance provider funding UK SMEs from around £50,000. It offers factoring and invoice discounting with advance rates to about 85%, service charges from 0.65% and discount charges at base rate plus 3.5%. It positions itself as a flexible, personal alternative to bank funding for smaller businesses.
This page covers
Funding Alternative invoice finance products, minimum facility, advance rate and pricing
Not covered here
General invoice finance education (see /guides/), sector pages (see /industries/), the full provider directory (see /providers/)
Key Facts
When Funding Alternative Invoice Finance Fits
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SME manufacturers or wholesalers with £300k-£3m turnover seeking a personal service
Independent providers like Funding Alternative typically offer more flexible credit decisions and dedicated account managers than high-street banks, making them well-suited for established SMEs with straightforward debtor books who value direct relationships.
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Businesses transitioning from bank invoice finance seeking better terms or service
The £50k minimum makes this accessible for smaller SMEs who've outgrown their bank's appetite but don't need the £250k+ facilities that larger independents require, while independent status often means faster credit decisions than clearing banks.
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Service sector businesses (recruitment, staffing, professional services) with 30-90 day payment terms
These sectors generate consistent monthly invoicing volumes that suit both factoring and discounting models, and independents typically understand sector-specific debtor concentration better than generalist banks.
When to Look Elsewhere
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Startups or businesses with under £200k turnover
Better fit: Kriya. Kriya's tech-driven platform accepts smaller facilities from £10k with faster automated decisions for early-stage businesses.
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Construction or contract sector with retention clauses and stage payments
Better fit: Sonovate. Sonovate specialises in complex contract funding including retention management, which general SME providers typically exclude.
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Businesses needing same-day funding decisions and digital-first experience
Better fit: Triver. Triver's online platform delivers decisions in hours rather than days, better suited to businesses prioritising speed over relationship service.
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High-volume, low-value invoice businesses (under £500 average invoice)
Better fit: Pulse Cashflow. Pulse specialises in high-transaction-volume businesses where traditional providers' per-invoice admin fees become prohibitive.
How Funding Alternative Invoice Finance Compares
| Provider | Type | Min facility | Fee from | Advance to | Speed |
|---|---|---|---|---|---|
| Ultimate Finance | both | £50k | 0.5% | 90% | 5-7 days |
| IGF Invoice Finance | both | £50k | 0.45% | 90% | 3-5 days |
| Optimum Finance | both | £100k | 0.6% | 85% | 7-10 days |
| Bibby Financial Services | both | £25k | 0.75% | 90% | 5-7 days |
vs Ultimate Finance: Ultimate Finance has 40+ years trading history and publishes transparent fee structures online, whereas Funding Alternative operates with more bespoke pricing on application.
vs IGF Invoice Finance: IGF offers specialist bad debt protection insurance as standard on factoring facilities, which Funding Alternative typically arranges separately if required.
vs Optimum Finance: Optimum's higher minimum suits £500k+ turnover businesses, while Funding Alternative's £50k entry point serves the £200k-£500k SME segment more effectively.
vs Bibby Financial Services: Bibby is part of a multi-billion international group with 15,000+ clients, offering more standard processes, whereas Funding Alternative's smaller scale allows more flexible underwriting on marginal cases.
Worked Example
A Leeds-based printing company with £450k annual turnover
Setting Up With Funding Alternative Invoice Finance
- 1
Initial enquiry and assessment
Submit your last 12 months' management accounts, aged debtor report, and recent bank statements. Funding Alternative will assess your debtor quality and concentration. Expect an indicative quote within 2-3 working days covering advance rate, service fee percentage, and any industry-specific exclusions.
- 2
Credit assessment and facility design
The provider conducts credit checks on your main debtors (typically those representing 10%+ of your ledger) and reviews your trading history. They'll propose facility terms including advance rate, reserve retention policy, and whether confidential discounting or full factoring suits your business model best.
- 3
Legal documentation and go-live
Sign the facility agreement and debenture (fixed and floating charge over assets). Funding Alternative notifies your customers if you're using factoring, or sets up confidential payment redirection for discounting. First funding typically arrives 5-7 days after documentation, with ongoing advances released within 24 hours of verified invoice submission.
FAQs
Can Funding Alternative work with businesses that have CCJs or past credit issues?
Independent providers typically assess each case individually rather than applying automatic bank-style credit scoring. While satisfied CCJs over 12 months old may be acceptable if current trading is strong, active county court judgments or a history of bounced payments to suppliers will likely result in decline. The focus is on current debtor quality and cash flow trajectory rather than solely on director credit history.
What happens if one of my customers doesn't pay their invoice?
Under factoring, the provider typically chases payment through their credit control team for 60-90 days before returning the unpaid invoice to you (recourse factoring). You must then repay the advance received. Non-recourse factoring with bad debt protection costs 0.2-0.4% more but transfers the risk to the provider. Under confidential discounting, you retain all credit control responsibility and must repay advances if customers don't pay.
Is there a long-term contract or can I exit if my cash flow improves?
Most invoice finance agreements run for 12 months minimum with 90 days' notice required thereafter, though this varies by provider. Early exit typically incurs 3-6 months' service charges as a termination fee. Unlike overdrafts, you cannot simply stop using the facility without formally exiting, as the legal charge over your debtor book remains in place until released.
How does Funding Alternative compare to getting an increased overdraft from my bank?
Invoice finance typically costs 4-7% annually (service charge plus discount charge) versus 6-9% for an overdraft, but grows automatically with sales whereas overdrafts have fixed limits. Banks often reduce overdrafts when they're most needed during growth or sector difficulties. The key difference is invoice finance is secured against specific debtors rather than general business performance, so approval criteria focus on your customers' creditworthiness not just your profit history.
Our Verdict
Funding Alternative lives up to its name by providing a genuine alternative to bank invoice finance for smaller SMEs. The £50k minimum is one of the lowest in the market, and their independent status means faster decisions and more willingness to look at businesses that banks may decline. Worth including in your comparison if you are a smaller business.
Director, Market Invoice
Oliver leads Market Invoice's editorial and comparison research. With a background in UK commercial finance, he oversees provider analysis, rate verification, and industry reporting across all verticals.
Last reviewed: 8 April 2026