Together, the UK and EU's alternative credit sector is now valued at nearly £13 billion – a dramatic rise that has largely flown under the radar amid more prominent headlines focused on traditional lending markets. As things stand, alternative credit appears to be an increasingly promising route for founders who are looking for a pathway towards growth in the current economic landscape.

Once considered a last resort for businesses unable to meet stringent traditional lending criteria, alternative finance has rapidly become the preferred funding option for companies across diverse sectors. Businesses have begun to recognise the advantages of capital that aligns closely with their strategic growth goals. In doing so, alternative finance has emerged as much more than just an alternative, it can offer a distinct competitive advantage.

The origins of alternative credit

Alternative credit has long existed, but according to Masterworks, prior to 2008, it only served a niche market, one that consisted mostly of small businesses and companies seeking shorter-term financing. Essentially, any business that a commercial bank would not consider. For many startups of the past, this resulted in alternative credit feeling like a last resort and not the optimal path towards growth

Following the global financial crisis, when traditional legacy banks lost considerable trust from businesses both big and small, the alternative funding sector saw an opportunity to hit the mainstream. It became more widespread as it filled the gap left behind by the previous financial institutions. It left a lasting impact on how willing investors were to take risks, leading to a push for alternative options that were viewed as a safer alternative.

The aftermath of 2008 has greatly influenced startup behaviour in the modern day, driving founders to look at the alternative credit sector favourably. Alternative funding platforms have relatively low liquidity compared to conventional assets while also being more complex, and they don’t derive their value from stock performances. With the 2025 economic landscape frequently fluctuating due to global events, this approach to funding is vastly more appealing to today's founders than it was in the past.

The benefits of alternative credit

Using alternative credit methods hosts significant benefits for businesses of all sizes. Using these solutions, a business is afforded the flexibility needed when growing. This financing agility, whether it comes from a flexible payback timeline or in the form of credit, provides SMEs with freedom to focus first and foremost on their products, with funding concerns as second. 

Accessibility and speed are both significant drivers in the alternative credit space. For SMEs, lending is essential to growth, and without the capital reserves needed to sustain short bursts without funding, fast capital injections are essential to their survival. 

Non-dilutive alternative credit solutions may be the key to providing SMEs with the flexibility needed. By providing  an SME (and generally startups) with full retention of control over the business and products, a lender allows the founders to fulfil their direct vision and growth plan. To give an example, Juice helped custom-furniture providers Grain & Frame with its financing when its business model meant traditional lenders wouldn’t support it. Revenue-based financing wasn’t a fit for the business – it forced repayments too soon, cutting into working capital before they could reinvest in inventory. Through alternative finance, Grain & Frame were provided  with a tailored credit facility that allowed them to draw funds as needed and pay suppliers on time. It received flexible repayment terms that aligned with their inventory cycle, so they weren’t paying for goods they couldn’t sell yet. This approach resulted in a stabilised supply chain, a strong foundation for long-term expansion, more efficient cash flow, and three times the business growth in just six months.

How alternative credit is used today

Since then, alternative credit has become more accessible and transparent for startups and scaleups alike, driven by AI-powered underwriting, alternative data, and flexible funding models. It has resulted in a funding solution that is more strategic in how the finance it generates gets distributed and used, resulting in a more attractive offering than previous legacy options.

As an example, real-time insights can lead to a more accurate distribution of funds into key areas of business. Knowing how to allocate finances in an intelligent way is a vital step in a funding journey and ensures that no money goes to waste. Understanding how much to spend on marketing, hiring, product development and how much to keep in stock for the future is made easier through the insights some alternative credit solutions can offer, ensuring a business makes the most of their funding. It is no longer just an option – it can offer a competitive advantage.

Alternative credit is driven by its flexibility – by allowing the visibility of customised offers and funding on demand, startups are accessing quick capital in short timelines, improving their cashflow, speeding up their funding, and reducing debt. This method of alternative funding is changing the way startups operate and bringing into the fold more innovative founders driven to take their products or services to market.

The future of alternative credit

With the alternative credit industry changing and expanding – the market size is estimated to have passed $10 billion in 2022, with an estimated value projection of $40 billion by 2032 – the time for alternative credit as a standard for startups is now. Its distinct competitive advantage and accessibility, leveraging modern technology like AI, will power this expansion, taking this level of hyper-personalisation and flexibility in funding to SMEs and startups on a global scale. 

The future of alternative credit is bright, with technology continuing to evolve and transform the way SMEs secure essential funding. A more accessible method of credit and funding makes the pathway to success more accessible for startups and e-commerce businesses that don’t conform to traditional lending criteria. 

In summary, as we see a continued economic downturn and shifts, the value of alternative funding or credit has heightened and offers a distinct competitive advantage. This funding model can provide e-commerce businesses with real-time insights into their capital, leading to more intelligent capital deployment and improved returns. Post 2008, alternative credit now serves more than just niche markets; SMEs seeking shorter-term financing or those needing a more flexible repayment plan can leverage a simple, secure, and uninterrupted funding model provided by firms like Juice. Alternative credit is no longer a fallback. For modern founders, it’s a first choice.