The government has recently announced that it will be channelling an extra £100m into alternative funding, helping to ease pressure on small businesses struggling to get the finance that they need. In light of decreased bank lending to small firms, this can only be good news.
The government has backed a £500m fund through the Business Finance Partnership, part of the wider £21bn credit easing programme which is looking to help businesses and open up new avenues for finance. This is all aiming to make small businesses less reliant on banks for finance – and £100m will be directly invested in alternative finance channels.
Business Secretary Vince Cable commented; “As businesses are continuing to struggle to get credit from their banks, developing alternative lending channels so firms are less reliant on banks is essential. The Business Finance Partnership will help to develop these channels over the medium term so businesses seeking credit have more options available to them. Our aim is to create a more diverse financial infrastructure which better serves the needs of SMEs.”
There will be an extra £400m invested by the treasury into medium sized businesses. This again will make it easier for them to raise finance, helping businesses benefit from Britain’s creditworthiness and the low interest rates available.
This is all good news for businesses looking for ways to get access to funds. Invoice finance is a big part of the alternative means of financing that are available. This lets businesses release the capital tied up in unpaid invoices, helping to keep cash flow healthy. If your business wants to minimise taking on new debt but needs access to funding, you can borrow against unpaid invoices either through factoring or invoice discounting.
Looking into alternative finance solutions is an essential part of surviving in the UK economy for any business needing access to extra funding.