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Brexit has brought uncertainty and uncertainty is a poor bedfellow for a business trying to plan ahead. The large corporates have been vocal about their concerns, yet arguably the issue is even more acute for small businesses where access to funding is harder to come by.
According to the Federation of Small Businesses, the European Investment Fund has provided almost £500 million a year to UK SMEs. The UK Government may attempt to plug this gap, but the Patient Capital Review has made it clear that the political preference is for the private sector to pick up the tab. That means more money from Angel Investors, Venture Capital Trusts and the Banks – all three of which prefer more established businesses with clear growth potential that they consider lower risk.
Fortunately, there is another route to capital investment in the form of alternative finance. UK equity crowdfunding offers capital investment in exchange for equity. UK debt crowdfunding also known as peer-to-peer (P2P), along with a growing number of alternative lenders like challenger banks, lend money to businesses – often at more attractive rates or terms than the bigger UK Banks.
Unfortunately, many UK SMEs are unsure of alternative finance as a source of money when they need it – either as a loan or a capital injection.
There are a number of information sources that will help business owners and finance directors assess the benefits of alternative finance for their financing requirements, like businessagent.com. For example, using the businessagent.com loan application a business has access to over 70 P2P platforms and alternative lenders. They can quickly grasp the range of rates available to them without any negative impact to their credit score and in considerably less time than it takes to gather and assess all of that information directly. From that initial filter the process of assessing the terms and conditions and whether this type of loan is right for their business is a far simpler one.
But regardless of where SMEs turn to for capital, credit rating agencies and the information stored at companies house will have an impact on the willingness of any provider offer a loan or capital to a business. A strong business plan, clear information from balance sheets and transparency on any issues from the past are all necessary.
Tagged: SMEs Alternative lenders P2P Platforms Loans
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