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New CBI SME finance guide highlights invoice finance role

If any further confirmation was required of the role of alternative finance, including invoice finance, in the provision of SME finance, the new CBI guide, Ripe for the picking, provides it.

The key focus of the new CBI guide is showcasing the breadth of alternative finance services available to small and medium-sized businesses in the UK, from invoice finance and peer-to-peer lending to self-issued retail bonds and corporate venturing. Invoice finance has driven the growth of the alternative finance sector in recent years.

The CBI also highlights the change under way in SME lending and the importance of small business growth to general economic recovery. The organisation puts a spotlight on the sea change occurring in SME finance, with prolonged traditional lender caution helping fuel the emergence of a raft of new lenders under the alternative finance umbrella.

According to the CBI, SMEs plan to spend £51 billion in the next year and key to the successful release of this capital is the right funding vehicles. Bank lending is not the right option for some SMEs and services such as invoice finance, which offers a flexible and transparent means of raising capital to help maintain cash flow, are an ideal alternative.

With UK banks still the source of 80% of small business credit according to the CBI, it is clear that there is plenty of room for growth for alternative finance, which is a sentiment shared by Business Secretary Vince Cable. Commenting on the launch of the guide, he highlighted the importance of alternative finance to business growth.

He also gave another hint that alternative finance will play a key role in the government’s future plans to improve access to small business lending: he stated that the government wants to see a shift towards non-bank lending. Invoice finance clearly has an important role to play.

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