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Business groups’ message: Don’t say you can’t access business finance

01/08/2016 / Comments 0

Stop saying you can’t access business finance

There is a common belief that businesses are unable to access the funding 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.

The Department for Business Innovation and Skills’ Small Business Survey, published in May, showed 22% of SME employers saw access to finance as a major problem in 2015.

A third of respondents were put off from accessing finance because they thought they would be rejected, whilst a fifth of those asked said they did not know where to find the appropriate finance.

But is this the real reason businesses feel that access to business finance is challenging?

Closing the information gap

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 recent stats from the British Business Bank, which revealed that 90% of SMEs go to their current account provider when searching for finance and that, if they don’t get what they need from the bank, half of them take no further action.

This reluctance to look elsewhere could be because awareness of alternative funding options remains low amongst UK businesses, according to research from the British Chambers of Commerce (BCC).

The survey of more than 1,000 businesses revealed that there is a significantly lower awareness of alternative and equity finance products – such as peer-to-peer funding and trade finance – compared with traditional loans and overdrafts.

The BCC’s acting director general, Adam Marshall, said: “At a time of transition for the economy, government help can play an important role.

“So there is work to be done to raise awareness among businesses of schemes such as the British Business Bank, which was set up by the government specifically to make finance available to firms via banks and alternative lenders to promote business growth. The clear message needs to be that growth funding is available.”

Reluctance to shop around

The Forum of Private Business (FPB) is also urging 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?

Since the referendum decision to leave the European Union there have been fears that bank lending will dry up as a result of the economic uncertainty.

But, speaking at the launch of the Bank of England’s Financial Stability Report in July, the bank governor, Mark Carney, said it will do everything possible to ensure banks were able to continue offering loans to companies.

He said: “If there is a slowdown in credit, it will be demand driven, not supply driven‎.

“It’s important to ensure that there is no question about the availability of credit. It is the one thing we want to take off the table.”

In fact, reduced demand for bank credit has already been reported by the British Bankers’ Association (BBA).

In their latest figures on bank support for SMEs in Q1 2016, the BBA showed high lending approval rates against a backdrop of reduced demand.

Compared to Q1 2015, SMEs made 10% fewer loan applications in Q1 2016, with numbers dropping from 43,287 to 39,422.

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.

The solution

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 info@hiltonbaird.co.uk or request a call back, and one of our team will be in touch.
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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?


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Some of the funders we work with

  • Close Brothers Invoice Finance
  • PNC Business Credit
  • Leumi ABL
  • Metro Bank SME Finance
  • Santander Corporate & Commercial
  • Spotcap
  • Haydock Finance Ltd
  • Regency Factors
  • Boost Capital
  • Merchant Money
  • Calverton Finance
  • Skipton Business Finance
  • Davenham Asset Finance
  • Davenham Trade Finance
  • Market Invoice
  • Team Factors
  • ABN AMRO Commercial Finance
  • Aldermore Invoice Finance
  • Catalyst Finance
  • 1pm
  • Ultimate Finance Group
  • Nucleus Commercial Finance
  • 4Syte
  • Giant
  • Secure Trust Bank
  • Woodsford Tradebridge
  • iwoca
  • IGF Invoice Finance
  • Innovation Finance
  • Trade Finance Partners
  • GapCap Cashflow Finance
  • Shawbrook Business Credit
  • Bibby Financial Services
  • Lloyds Bank Commercial Finance
  • Positive Cashflow Finance
  • Asset Advantage
  • Investec
  • Roma Finance
  • Pulse Cashflow Finance
  • InvoCap
  • Barclays
  • Partnership Invoice Finance
  • Royal Bank of Scotland
  • Creative Capital

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