What does the decision to refocus the Funding for Lending schemes solely on SME finance say about the performance of the initiative, and others, to date? While the debate rumbles on, it does underline the role of invoice finance and other non-bank SME finances services.

The timing of the switch in focus is notable: criticism of the scheme’s ability to improve access to SME finance had become increasingly vocal. Tellingly, while new Funding for Lending figures show a major increase in lending to the end of September, according to the Bank of England, SME lending fell.

According to the Bank’s latest report, business lending fell by £2.3 billion in the three months to August, while the recent RBS Large report claimed that SME lending has shrunk by a quarter since 2009.

Unsurprisingly, the move has been widely welcomed, with the British Chambers of Commerce and the Federation of Small Businesses among the business organisations applauding the change in policy. However, caution has accompanied the plaudits, and all eyes will be on traditional lenders to see whether the refocus will achieve the intended thaw in lending policy.

What is clear is what the realignment says about non-bank SME finance services: with Funding for Lending and other initiatives failing to meet small business lending expectations, it is invoice finance and other alternative finance products that have filled the gap, with their flexibility, transparency and accessibility proving a refreshing change from the challenges and pressures of attempting to secure business bank loans or business overdrafts.

The likes of invoice finance and peer-to-peer lending are playing a key role in the revitalisation of the business sector and, as companies await the Autumn Statement, all eyes will be on the Chancellor.

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