Could SMEs be missing out on finance options?
Investors believe that more than half of the UK’s small businesses could be cutting off some potential sources of finance, according to new research.
Nearly two-thirds of investors told a study by Amicus Finance that they feel SMEs are too dependent on traditional bank finance.
They also revealed that alternative funding solutions are becoming increasingly popular and suggested companies may be missing out if they fail to consider them.
Three quarters of investors believe that growth of non-bank finance will boost resilience in the financial system while also easing the burden on banks.
A similar level of investors also expect the appetite for alternative finance to grow in the next two years, with growth of around 23% expected.
SMEs are forecast to be one of the driving forces of this growth, provided of course that they are all aware of the options available to them.
The recovering economy has led many firms to explore their growth opportunities, with conditions now much better for expansion than they were two, three or even five years ago.
As a result, alternative means of accessing finance are in demand and many investors are assessing their options in a bid to work out what sort of assistance they can provide.
One of the main requirements for finance was noted for short term bridging loans that would be secured against residential and commercial property.
This highlights how firms are expanding as moving into larger properties usually occurs more often when market conditions are stronger.
Of course these sorts of moves are not without risk and it is very easy for a firm to overspend or run out of finances.
Good financial planning is essential while companies should be aware of their available options should their attempts to expand or access finance not go as planned.
It is recommended that a company contacts an insolvency practitioner if they are facing financial difficulties or wish to streamline their operations as a number of solutions are available.
By Phil Smith