Access to finance is on the minds of many UK businesses in 2019; this article provides insight for business owners on the trends for this year, and how these could impact the funding challenges faced.
The life of a business is never straightforward and there will always be obstacles. One of the most common hurdles in building and growing a business is ensuring the correct amount of finance is obtained to support growth plans.
Recent research has shown that nearly 30% of UK SMEs require funding simply to stay in operation, yet a large number still find accessing this finance a major challenge. One reason is that there still seems to be a reluctance among UK banks to invest in perceived risk and innovation.
1. Fintechs’ Role in Supporting SME Loan Options
New financial technology (fintech) platforms are becoming an ever increasingly popular option for small-businesses in need of a boost to working capital, especially in comparison to larger lenders. Using smart technology, fintechs are providing smaller businesses with access to innovative accounting software, financial management, insurance and business evaluation services.
2. Rise in Open Banking
Saving time, hassle and risk for small businesses is what Open Banking is all about. Using integrated portals, it provides a safe and secure way for providers to access financial information quickly and efficiently. It can provide small businesses with increased transparency, smoother form-filling, fairer credit decisions and greater growth opportunities. Looking to access funding as efficiently as possible in the new year, owners should most certainly consider tapping into providers who use Open Banking technology to help benefit their business.
3.Disruptive Financing Options vs Banks
Accessing finance via traditional banks versus more disruptive financing means will forever be an ongoing debate. Today, there remains an understood resistance from banks to lend to UK small businesses, prompting concern on the wider impact on UK small business survival rates, with the total amount of bank overdrafts and loans outstanding to small businesses decreasing by nearly £6 billion in the past five years. Make sure to research as many options as possible before deciding which option suits best.
4.Alternative Finance Increasing in Demand
The small business funding gap is most certainly an area that needs to be rectified; as limiting access to finance can not only effect small business growth but can negatively impact wider economic progress as a result too. There is a need for ease of application and smoother processing as the highest priority and many alternative finance options provide just this, and therefore increasing in appeal.
5. Growing Need for Flexi-Finance
It’s always worth forecasting and planning out exactly how much finance is required and when. This is sometimes very difficult to estimate but having the option to automate quickly the amount of lending required can be beneficial.
Finding flexible finance options, can allow access to a consistent source of funds for as long as it might be needed. It’s a positive way of receiving regular agreed amounts on a continual basis, allowing you to plan and grow in a safer environment.
We hope familiarising yourself with some of these trends will help set you on a strong path for a successful 2019.
Partner and SME expert.
Register for our newsletter to keep up-to-date with the latest business news.