Will government funding make a difference to SMEs?

You are not alone if you think that the banks in general are not really supporting smaller businesses. According to the quarterly ‘SME Finance Monitor’ 34% of all loan applications and 21% of overdraft requests were declined by banks between April and June this year. Only 10% of these applicants were directed to alternative sources of funding such as invoice discounting and peer-to-peer lenders like Crowdcube and the rest – at least 90% therefore – were left high and dry.

Small Business Bank

The chancellor’s proposal for a small business bank could provide a solution but this is unlikely to be in operation (if at all) for some considerable time but recently there have been some new initiatives for alternatives to bank lending. Platform Black is just one example of an online invoice trading company –started three months ago – which auctions outstanding invoices to institutions and private investors. Buyers compete on the fee they will charge to advance the funds for up to 90 days thereby creating a customer-oriented system that must work to the advantage of the borrower.

Moving cash between countries

Similar foreign exchange services have also been launched matching small businesses and individuals who want to move cash between countries – again undercutting existing cumbersome bank facilities.

Traditional banks are reluctant to lend but the good news for businesses is that credible and less expensive alternatives are starting to emerge.

If you would like to discuss any aspect of funding your business please just give me a call on 07774 110788, email me andrew@mercantile-group.com or send me a Tweet @Andrew_Hawkins