February 26, 2016

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Business Lending Bias

February 26, 2016

 

My article ‘SME and proud’ illustrates, in facts, the importance of the SME to the UK Economy, with SMEs contributing a combined turnover of £ 3.3b and being responsible for providing over 80% of employment in the UK economy. So why is there a reluctance to fund SME businesses?

 

A post by Everline states that for every £100 banks in the UK lend to business only £26 goes to small businesses with £74 going to non SMEs. Furthermore the post goes on to say that non-SME businesses will only generate £342 from this investment where as an SME would return a staggering £814 return for the local economy.

 

In terms of the big numbers this translates as an SME receiving on average £23,000 in lending as opposed to the non SME who will receive on average a stunning £16,500,000.

 

4 in 10 SMEs refused borrowing

No wonder then that 40% of small businesses are refused a loan by the high street banks. Vital funding that SMEs need for business growth to support recruitment of new staff, training, stock purchase, new machinery and equipment, marketing and premises etc.

 

Alternative finance

However, all is not lost, as a consequence of the banks apparent reluctance to lend to small business the market in alternative funding is now booming. There are now over 200 funders able to offer a broad range of funding solutions for SMEs – some of which are listed below:

 

Invoice finance and factoring

Cash advance

Trade credit

Family and friends

Asset Finance

Crowd funding

Community development Finance initiative

Grants

Government finance schemes

Angel investment

SME debt funds

Pension lead funding

 

Need some support?

If you need some help with business funding please get in touch. We work with a range of business finance specialists who would be more than happy to help.

 

Sources

Everline / Forum for Private Business / Alternative Business Funding / Nesta / BIS

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