We all know that the economy is still struggling and that small businesses are finding it hard to get by, especially when it comes to finding extra funding. This week, the Bank of England has highlighted how harsh the environment really is for small businesses – more than five years after the recession first hit.
The Bank of England has revealed figures that 55 businesses collapsed every day last month, the majority of them companies that employed five or fewer people. These businesses are often ones that find it hard to get off the ground or are strangled by a lack of cash flow.
Paul Fisher, leading director of the Bank of England, further added that even those businesses who do manage to find funding from the banks are often faced with a long road to get hold of the money with many bureaucratic hoops to jump through. He said; ‘Those small and medium firms who have got the finance they wanted… complain about the length of time it has taken, the bureaucratic processes and the onerous terms and conditions.”
Given that many businesses don’t even get that far and are refused loans and overdrafts from their banks it’s no wonder that so many SMEs are finding it difficult to cope in such conditions. In order to exhibit growth, there needs to be a culture of lending that helps to nurture small businesses, not strangle them.
Taking advantage of alternative lending solutions could be one way of tackling this. Invoice finance is one such example – eligible businesses can release up to 90% of the value of an invoice within 24 hours, helping businesses get quick access to flexible finance without taking on expensive new debt. If your business needs help with cash flow, then it’s worth looking at all your options, not just the banks.