The government has announced plans to help ailing businesses survive by paying their bills. It’s a positive move, but further promotion of alternative finance would be a better one.

According to the proposal, a new government guarantee would protect the supply of essential services such as information technology, water, gas and electricity. Failing businesses with a chance of survival would quality for the state assistance.

Of course, there is an election soon, and such initiatives tend to appear at such times, but the plan is a good one. However, focusing on measures to stop businesses reaching the point where they need this type of help would be a better approach. Improving SME access to business lending should be a priority.

The government has been active in the area, with differing results – the reform of the Funding for Lending scheme has failed to stimulate SME lending as hoped but the British Business Bank has integrated alternative finance into its lending strategy. However, the state can do more and, with the election due in May, it’s a good time for the SME sector to ask for it.

Alternative finance, and the use of services such as invoice finance, peer-to-peer lending and crowdsourcing, is going from strength and strength. A Welsh biotech company has recently broken the UK record for crowdfunding in the life sciences sector, raising £700,000, while asset finance use has risen to record levels according to the Asset Based Finance Association. It’s important that this momentum is maintained.

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