It doesn’t seem like we can go a week without hearing about how difficult it is for small and medium sized businesses to access finance. The banks issue statements saying that they are lending and are open for business and that there’s a lack of demand but I speak to lots of small and medium sized business owners who tell a different story.
Either they have been told by their “relationship” manager that they cannot support any new lending and therefore don’t apply or feel that because of previous conversations there is no point in approaching their bank.
It’s usually quite easy to see why the banks are unwilling to support. Maybe; whilst profits are growing they are still not performing as they were four to five years ago, there are no real tangible assets to provide as security and balance sheets are weak maybe due to losses incurred in recent years. More often than not there are usually also no up to date management accounts, no budgets to compare performance to or predict the future and generally a lack of business planning.
I believe it is the disconnect between business owner and funder that is the most important problem that we need to solve if we are to help small and medium sized businesses develop and ignite wider economic growth in the UK. I’m familiar with all of the bank lending schemes but don’t think that a one size fits all approach is what’s needed.
My opinion is that small and medium sized business owners need tailored advice that is based on an understanding of their business and their needs and with the knowledge of wider funding solutions available on the market.
Whilst some of the support a business will need will come from a high street bank there is now a wide range of alternative (peer-to-peer) funders that can offer flexible solutions, all of which can be combined into an overall funding package. This week I connected with a company called Platform Black who offer a flexible invoice finance product based on a peer-to-peer model. Funding Circle who offer peer-to-peer term loans report funding nearly £96 million via their army of investors whilst crowd cube provides more of an equity based solution.
There are solutions out there for small and medium sized business owners whether they are multi-generational businesses or run by give it a go entrepreneurs providing there is a solid idea, good commercial business plan, a passion and desire to succeed. So my advice would be connect with a professional who understands the alternative lending market and who can help find the right mix of funding products for your business and let’s get Britain going again!