Where should your small business be looking for finance? Banks might be your first thought, but recent developments in the alternative finance market have shown that more businesses than ever are looking into all their option before plumping for an expensive loan or overdraft. Asset based finance such as invoice factoring are filling the void caused by banks failing to lend to the country’s small businesses – they make up such a large percentage of employment opportunities in the UK that it’s essential funding continues to be available. We’ve put together a bit of a factfile about the SME environment in the UK,
What is an SME?
An SME is a business with fewer than 250 employees. This means a huge section of businesses are included within this bracket, from start ups with only a handful of employees to large, successful companies with multi-million pound turnovers.
How many SMEs are there in Britain?
There are over 4.6 million SMEs in the UK. Just through basic multiplication it’s clear how many jobs they provide for the population – as such keeping as many in business as possible is essential for the economy, especially when growth is currently so fragile.
How much do SMEs contribute to the economy?
SMEs contribute 67% of all private sector jobs in Britain and contribure over 50% of our GDP. Clearly, it’s essential that small and medium businesses carry on being able to contribute so heavily to the economy – and that will only happen if more funding options are available to them.
As such, with a multi-billion pound funding gap predicted in the UK, alternative lenders are becoming even more important to SMEs, and by extension to the economy as a whole. Businesses need to be aware of all the funding options out there – it doesn’t just stop at loans and overdrafts. Even if you don’t think your business qualifies, Factoring lenders have a great ability to lend to small businesses who might otherwise be turned down; for example, even start ups can be eligible for factoring, even without a long credit history of sales.
With SMEs playing such a big role in today’s economy, it’s essential that funding is available – that’s exactly what invoice finance can offer.