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SMEs taking alternative position on financing

While news of a reorganisation of corporate banking services at two of the country’s largest lenders won’t be welcomed by the small business sector, there is reason to believe that SMEs are increasingly turning to alternative finance services, one of which comes from a slightly unexpected source.
Barclays and HSBC have both announced that they are about to embark on a major overhaul of their services, with the former at least placing a strong emphasis on rationalising its corporate banking activities. With Project Merlin still mired in uncertainty, small business owners can be forgiven for seeing recent developments as a threat to their high street banking services.
However, at the same time, recent figures from the Asset Based Finance Association (ABFA) suggest that SMEs are developing a system of financial management that is leaving them less reliant on the big banks. ABFA data shows a healthy increase in the use of invoice discounting and factoring in its most recent quarter, while the association points towards a trend among members for using a combination of bank finance and invoice finance to access capital and maintain cash flow.
Another source of assistance that SMEs would do well to take notice of is a little-known mentoring programme for small business owners operated by Goldman Sachs. Only flagged up recently, despite being launched last year, the scheme offers advice and networking for small business owners.
What does this recent news tell us about the SME sector? Well, certainly that initiative in terms of protecting capital and cash flow in today’s climate counts for a lot, and part of this plan has to include using all the available small business finance services.
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