Access to Finance

Access to finance is important for any small business owner and there is now a record number of lenders to business across the U.K.

Over the last six years the supply of funds for SMEs has grown exponentially. The ability to borrow for business is not an issue, it is the awareness and access that is the most difficult issue we need to overcome. So how can we enable small businesses owners to find these sources of finance for their business?

A first refusal for finance should not be the end of the line for a small business, but does an SME need to look at other options at the outset. As highlighted in the recent 2017 Small Business Finance Markets report from the British Business Bank, the most common response from smaller business when they do not get the full amount of finance they applied for is to give up or cancel their plans. This can mean those businesses miss potential expansion opportunities and that  comes with a knock-on effect on UK economic growth.

There are over 250 lenders to businesses in the UK and it is estimated that less than 5% of SMEs have a Finance Director. So how can a small business owner find the time to research the right kind of funding from the right kind of lender in this bewildering market? Of course, it is not simple, so the easy option is to follow traditional routes in seeking out a business loan.

But is it a business loan that is required? Is there a more suitable form of finance available? Seeking lenders to support business outside of the usual format is unfamiliar territory and the key question - can they be trusted?  is the daily dilemma faced by SMEs across the UK.

How can we at FIBA and our Members help change this?  There are currently at least two initiatives where we are involved in assisting with this process by providing background to Government to assist in this regard.

  1. A research project has been commissioned by a number of small business groups on the real issues facing Access to Finance and FIBA has been invited to be at the heart of this process.
  2. The reform of UK banking offers a unique opportunity to rethink what we need from the financial sector and the Banking Futures project explores how to build a healthier, more resilient and inclusive banking sector.