Small and medium-sized businesses contribute a great deal to the UK economy. The sector is worth more than £200 billion a year, and this will rise to £240 billion by 2025. Additionally, UK SMEs are in a period of optimistic, extremely encouraging growth.
However, despite all of the positive forecasts and the strength of UK SMEs, funding from banks is still extremely hard to access. Many lenders are still in a cautionary mode and UK SMEs, who need business capital to fuel growth, are losing out.
Today, we’ll take a look at how SMEs can access funding from alternative streams to push forward their growth plans.
SMEs Need an Alternative
Prior to the great worldwide financial crash of 2008, SMEs had a very small number of institutions to approach for their lending needs. Small business lending was in the wheelhouse of a handful of institutions, and most, if not all, of these are still reticent to lend to smaller businesses. Tied up with the need for greater regulation and oversight, small business finance and credit has all but dried up. Banks are still wary of finding themselves short in the case of another catastrophic economic downturn.
Despite all of the encouraging signs for SMEs, 55 percent still find it impossible to find the funding they need. All this means that UK SMEs need to look elsewhere for the injections of funds required to make the most of a promising present and a bright future.
Other Finance Channels
One of the biggest booms to UK SMEs going forward is the opportunity to secure their futures with alternative lenders.
Rather than being a solution to turn to when traditional lenders say no, alternative finance can often a raft of benefits for small and medium sized business, no matter their sector. In 2016, for example, 33,000 SMEs used alternative finance channels to secure funding and the funds raised by these businesses grew from £2.2 billion in £3.3 billion in that period. This number is only going to continue to rise.
Alternative lending streams also offer other benefits, enabling SMEs to move quickly and remain agile in their sector. The speed of arranging alternative finance is usually beyond that provided by traditional lenders. A business can secure funding in 48 hours, making it possible to seize opportunities as they arise. At the same time, the simplicity and flexibility offered by alternative lending comes with business-friendly credit terms and early repayment options. For small businesses, this is a great way to find the perfect solution for finance needs.
One of the biggest benefits of alternative lending is the reduction of risk. An SME can spread their funding across different channels can avoid having all their eggs in one basket with a single lender.
If your SME is seeking alternative lending solutions, get in touch with us today. Expert and committed to helping your business grow, GIC Capital will be with you every step of the way.