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Companies Unable to Secure Necessary Funding

Funding for small businesses has been on rocky ground recently. However, if you’re hoping that the end is in sight then you could well be disappointed for a while longer. A new study looking at the success rate of businesses applying for funding has shown that nearly one in three businesses (32%) have been unable to secure funding from the banks in the past twelve months – only 9% have received the funding that they originally applied for. This shows the tightening of bank lending requirements, illustrating the necessity for alternative finance solutions to step into the gap to give businesses the funding they need.

In this survey by Bibby Financial Services, 1,000 small and medium businesses were interviewed and a huge shortfall in the availability of lending was uncovered. Though this doesn’t come as a surprise – the Breedon report predicted a funding gap of up to £191bn over the next five years – it highlights the ongoing strife of many SMEs looking for essential funding.

Of all the firms that have applied for funding, nearly one in five were unable to secure what they described as ‘the necessary capital to invest in their business.’ This shows some of the origin of many SMEs’ lack of growth – it’s the age old conundrum; there can be no growth without cash, but there can be no cash without growth. So, how can businesses break the cycle and make the most of the funding options available to them?

Invoice finance is one way to unlock the capital tied up in unpaid invoices. If your customers are taking their time paying their debts, then you could find your cash flow stretched to breaking point. Factoring is an option ideal for smaller businesses – the factoring lender will take over debt chasing, letting you get on with running your business. Invoice discounting is an option that bigger businesses may find attractive, as you will stay in control of chasing debts. Even though the banks might be coming up short for small businesses, there’s no reason why your business has to go without funding.

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