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SMEs Encouraged to Look at Finance Options

The CBI has today called on small and medium businesses to consider a wider range of finance options in order to bolster growth within the SME sector. Instead of relying on bank lending and government schemes, the CBI is encouraging businesses to look at asset based lending, invoice finance, peer to peer lending and crowd funding amongst other options.

The CBI has highlighted the alternative finance options for small businesses with its new guide to small business finance options. It shows research that the high growth medium businesses within the UK could be worth an additional £20 billion to the UK economy by 2020. This comes in the wake of a report by GE Capital showing that SMEs plan to spend more than £51 billion over the next 12 months  - but they will need the right type of funding in order to realise their full potential.

The CBI has revealed that UK banks are the source of nearly 80% of all credit to growing businesses. However, the economic downturn has however increased the need for a new normal when it comes to lending. Banks are being more careful about lending to businesses perceived as ‘risky’ – and as such, they’re not filling the lending requirements of many SMEs.

Katja Hall, CBI Chief Policy Director, commented; “The UK’s small and medium sized businesses are the backbone of our eeconomy so ensuring they can access the capital they need to grow and create jobs is critical. Banks will continue to be a vital source of finance but it’s not a one-size-fits-all solution, and we’re encouraging growing firms to open their eyes to the broad range of funding options on the market.”

For example, if your business is struggling with late payment and cash flow, then a targeted solution such as invoice finance could help. By releasing the cash tied up in unpaid invoices, you can get reliable payment within a time frame that helps you to plan for growth rather than be left hanging on for customers to pay.

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