Making it as a start-up is hard, particularly in the current climate when suitable funding is increasingly difficult to come by. This lack of financing is often the key barrier to SME success, and it’s made even more difficult by a lack of understanding regarding government initiatives—if small businesses are unable to get the financing they need and don’t take advantage of schemes that could be available to them, the route to success will be tough.
The financial crisis has meant banks are tightening their belts, making it harder (and in some cases almost impossible) for start-ups to source the funding they need. These lending issues mean small businesses and even the UK economy as a whole is being held back—start-ups are the key to getting us out of the recession, but without suitable financing they can’t even get off the blocks.
In a recent survey it was found that 71% of accountants blame a lack of financing as the key reason for business failure, but a lack of understanding surrounding business initiatives doesn’t help either. In a survey of 151 SMEs it was found that 9 out of 10 didn’t believe government schemes can help their business whilst 61% admit that they’re unaware of the many advantages of recent initiatives, so a wider understanding is necessary if changes are to happen.
This education can go further than that as well—it might be time for SMEs to start looking at alternative funding solutions with the likes of factoring and invoice discounting being ideal, and a lot of banks are actually favouring these methods of finance over traditional lending options such as loans and overdrafts. Financing may be a key barrier to success but going about it the right way could still prove fruitful, so if you want to discuss the options of factoring and invoice discounting make sure to get in touch and see why alternative methods are the way forwards.