According to a poll created by YouGov, at least 18% of all small businesses within the UK want to change banks. Refusal of financial provisions may be the main reason for this; but indolence is perhaps more the reason
why some businesses hold back from leaving despite being unhappy with their bank.
Traditional Lending Methods Falling Behind
Lending statistics from the Bank of England reveal that capital flow to SMEs remains principally flat. Because of this, many battle-wearied business owners are reluctant to seek investment due to their rational expectation of being refused a loan. At least
79% of all business owners will not reapply for a loan due to being knocked back on previous occasions.
The Federation of Small Businesses (FSB) reported that 41% of SMEs were refused finance by high street banks towards the 2nd quarter of 2012. In addition to this, lending figures between 2008 and 2012 fell by £2.6 billion. This lack of funding, coupled with
high charges, is causing great dissatisfaction amongst the UK’s small business owners. The situation regarding bank lending has thankfully improved but the real change in the last few years has been the creation of countless new ways to fund business.
Alternative Lending Methods
The good news is that there are plenty of alternative lending options out there available for small business owners to access capital. Ethical banks are becoming more and more popular, as is peer-to-peer lending. New savings and loan providers aimed at SMEs
are also springing up here and there, so there are plenty of choices open to you. Here are just some of the options available:
Both of these models share the same principle of raising finance from a group of investors who pool together. Crowdfunding is likely to be the better option for start-ups and growing businesses as it allows budding entrepreneurs to pitch their ideas to potential
investors. If they like what they hear, they will fund the idea and contribute to making it happen.
Peer to peer lending platforms act as intermediaries, matching investors with borrowers in need of a business loan. There is a certain amount of risk involved with this sort of lending.
Asset finance consists of a company selling its assets, and then leasing them back at an agreed price as a source of finance.
For companies facing a difficult time financially, invoice finance is a good option. It involves selling unpaid invoices to third parties for a fee.
Lenders who specialise in a niche or a certain sector often provide short-term loans with a high interest, and are often offered on the basis of trading performance.
Merchant Cash Advance
These are a good option for businesses that take a lot of their money through card terminals, or sell online. As the funding is based on incoming transactions, approval rates are high, and SMEs can get the finance they need in order to grow.
While some business owners might be struggling to get hold of the finance they need to grow their business, they may well have a large pension pot which they aren’t able to touch. They can however use this to fund their business through Sipp/SASS through either
an intellectual property purchase or a commercial loan.
Join Us and Find Out More!
Do you wish to find out more on alternative finance and what it can mean for your business? Learn everything you need to know by visiting the
Finance and Society Panel Debate hosted by Manchester Business School on the 20th May 2015.
Alison Loveday will be on the panel and on hand to provide information and advice on the subject.
Innovate or Bust – Alternative Finance for SMEs
Venue: MBS (Manchester Business School)
Time: 17:45 – 19:45
What are the benefits of alternative lending methods and what are the risks involved? Which option is the best for your business and how do you go about securing alternative finance? How reliable and trustworthy is such a service?
These are just some of the questions the panel will hope to answer come the 20th of May – so make sure you are there to find out more! The panel includes:
• Ismail Erturk (MBS)
• Alison Loveday (Berg)
• Barry James (CrowdFunding Centre)
• Vernon Hill (Metro Bank)
Don’t miss out. Book a place at this fantastic seminar now by sending an e-mail request to