Business groups’ message: Don’t say you can’t access business finance
There is a common belief that businesses are unable to access the business finance they need to prosper because banks aren’t lending like they used to. But, this negative attitude towards access to business finance is actually misplaced – and even harmful.
Instead, business leaders and government ministers are suggesting that the real issue is a limited awareness of alternative finance providers and an over-reliance on local high street banks.
According to statistics from Statista, the biggest worry for 15% of SME’s was securing financing for expansion and for a further 13% it was securing financing for business as usual.
But why is it that businesses feel that access to business finance is challenging?
Closing the information gap
In 2016, former small firms minister Anna Soubry reported to the Business Innovation and Skills Select Committee that part of the problem with access to finance is down to small businesses themselves.
She said that some businesses she had spoken to were restricting their search for finance to their high-street bank and that the government should be helping to educate businesses on the alternative options to close this information gap
This over-reliance on banks is backed up by the 2019 Small Business Finance Report from the British Business Bank. The report stated that when businesses first identify a need for finance, the most common response is to approach their main bank, followed by looking for information online.
This reluctance to look elsewhere could be because awareness of alternative funding options has historically been poor among UK businesses. According to research from the British Chambers of Commerce (BCC), in 2018 52% of respondents said they were aware of P2P lending, and 70% were aware of crowdfunding platforms.
While this is an improvement on previous years, it still shows that there is work to do to ensure that UK businesses are aware of all the options for funding.
The BCC’s CEO, Keith Morgan, said: “We believe that providing better information to smaller businesses, aimed at building their awareness of and confidence in finance options, is an essential first step in encouraging them to seek the finance best suited to their needs.
“This increased awareness of options will be important in ensuring smaller businesses are better placed to make the right finance choices as uncertainty diminishes and confidence returns.”
Reluctance to shop around
In the past, the Forum of Private Business (FPB) has also urged businesses to take back control over access to finance.
Ian Cass, managing director of the FPB, said: “The banking system is much more robust than it was a decade ago and whilst the banks may have failed small firms in the past, there is good evidence that there is now an adequate supply of finance to support growth, not just from the banks, but also from the new challenger banks and peer-to-peer lenders.
“But businesses still seem reluctant to shop around and are unaware of where they can find information on the best financial products for their business.
“We endorse the minister’s view that more needs to be done to make it much clearer to businesses what the options available to them are.”
Will Brexit make access to finance more challenging?
In all the uncertainty since the referendum decision to leave the European Union, one of the fears for small businesses has been that bank lending will dry up as a result of the economic uncertainty.
But, in the 2019 Bank of England’s Financial Stability Report, it was made clear that the UK banking system remains strong enough to continue lending in the event that Brexit causes economic and financial shocks.
In a press conference at the time the report was released, Mark Carney echoed the findings of the report.
He said: “There have been extensive preparations that began the day after the referendum and continue to this day.
“There have been extensive preparations, there have been expensive preparations, as well, extensive and expensive preparations to ensure that the core of the financial system is ready for whatever form of Brexit it takes.”
Are you holding your business back?
So, with business leaders suggesting that businesses hold some of the blame for access to finance difficulties, it’s time to ask yourself if you’re holding your company back.
Do you rely on your bank for funding information? Are you aware of all the solutions available to you? And, do you dedicate enough time to the funding search?
As a commercial finance broker, we find that many businesses know that they should be dedicating more time to the search for funding but are being held back by the challenge of understanding and comparing different funding solutions.
With so many products and providers to choose from, combined with financial terminology that often differs from funder to funder, educating yourself on the options available can be extremely challenging – especially for time-strapped business owners who don’t have the resource to dedicate to the search for funding.
As a result, many business owners end up tied into facilities that aren’t suitable for their needs or are unable to successfully obtain finance at all.
This is where we aim to help.
With extensive experience across the entire commercial finance market, we will take the time to get to know your business and its requirements before introducing the most suitable facilities on the market.
This can save you valuable time and resource whilst helping you to secure a funding facility tailored to your needs.
For more information about how we can help find the right business finance solutions for your business, call 0800 9774833, email firstname.lastname@example.org or request a call back, and one of our team will be in touch.
Request a call back
What do you think? Do you understand all of the finance options available to you? Or does it need to be easier for businesses to understand the funding solutions on the market?