SMEs across the country are looking to grow their businesses, provided they have credit, according to new research by the BDRC Contintential SME Finance Monitor. In light of ongoing gloomy growth predictions, this is encouraging news.
The Finance Monitor survey has shown that more businesses are finding the finance that is essential for growth, increasing their confidence. However, this is a fragile confidence that will be easily shattered by the shaky state of the economy, red tape, and ongoing issues with late payment.
The trend is that if businesses already have an existing line of credit, such as a loan or overdraft, then extending or renewing is proving more successful than trying to get access to new lines of credit. Extending finance has a 90% approval rate, whereas trying to get hold of new credit only has an approval rate of 59%.
Despite this, 48% of SMEs are planning to extend their business. This is especially true for smaller firms who are looking to extend their reach.
This indicates that more SMEs will be applying for finance over the next quarter. However, challenges still remain and it’s worth looking outside of the traditional bank finance options if you need to open up new lines of credit.
Invoice finance is one such means to get access to finance, and can also counter late payment, one of the big obstacles to SME growth. If you’ve got a sales ledger full of customer debts, then you can borrow against the value of the invoice, releasing cash within 24 hours rather than waiting for months. This is a versatile form of credit, suitable for a whole range of businesses.
If your business is looking to grow this year, then be sure to look into all your credit options. Loans and overdrafts aren’t the only option, so looking into more flexible forms of finance could be well worth the effort.