The importance of alternative finance in helping SMEs grow their business

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By Jonathan Willder, CEO, Catalyst Business Finance Ltd

When traditional funding sources are unable to meet their funding needs, businesses can now look to the alternative finance market where a new generation of finance companies offers significant choice. Combining financial technology and personal relationships customers can enjoy flexibility, transparency and speed of response – an evolution to enable companies to realise their ambitions.

  • Alternative Finance offers a far wider choice for businesses to get funding that is best suited to their needs.
  • New funding options allow business owners to be in control of their finances, enabling them to realise their business ambitions.
  • New legislation will enable more SMEs to have more opportunity to get the funding they need to grow their business

According to the Q4 2015 SME Finance Monitor compiled by BDRC nearly half (45 per cent) of all the SMEs interviewed agreed that they would use external finance to grow and develop their businesses. So where do owners and entrepreneurs go to find the funding they need?

The alternative finance market has grown significantly in the last three years but is still seen as the second choice for business owners seeking finance. The first port of call for many would be to approach traditional banks but often there is only a narrow choice of funding options available to them. A simple loan or overdraft may be the answer – but these are not always best suited to meet the needs of a business.

A recent FCA report highlighted concern that funding markets remain heavily concentrated, with the largest four providers accounting for more than 85 per cent of business current accounts and 90 per cent  of business loans. However there is an important change happening, with new legislation* coming through the Small Business, Enterprise and Employment Bill, essentially requiring the largest UK SME lenders to forward on details of SMEs they reject for finance to a wide range of alternative finance providers (where SMEs give their consent). This proactive approach raises awareness of the growing choice that is now available to businesses**.

Whether your cash flow needs are either for the short term or the longer term it is worth taking the time to research the finance options that could now be available to you. This can be done by speaking to a broker who specialises in seeking business finance options for companies or maybe conducting some desktop research yourself.

Pivotal to any funding relationship is to ensure that you are getting the finance you need quickly, easily and from providers who know and understand your business and the industry you work in. Have they explained how the product works, how much it will cost, the terms of the finance, how long you want finance for etc?

Funders like Catalyst Business Finance are well positioned to react positively and quickly to ensure that you receive the right product at the right price, collaborating where necessary with a range of alternative finance providers where Selective Invoice Finance may not be best suited to the identified need.

Long gone are the days of lengthy application forms, visits to the bank manager and then waiting weeks for your application to be approved. Alternative finance needn’t feel scary – there are countless new providers who can react quickly to offer innovative funding solutions. Finding the right provider with the right funding product for you will help you to move quickly in taking your business forward.

Find out more about how Catalyst can help finance your business by visiting www.catalyst-finance.com or speak to one of our team today by calling 01925 665365

* https://www.gov.uk/government/consultations/sme-finance-help-to-match-smes-rejected-for-finance-with-alternative-lenders/sme-finance-help-to-match-smes-rejected-for-finance-with-alternative-lenders

 ** https://www.gov.uk/government/consultations/sme-finance-help-to-match-smes-rejected-for-finance-with-alternative-lenders

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