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Why alternative finance must feature in Summer Budget 2015

The Summer Budget 2015 is attracting a lot of attention, largely because of spending cuts. But there should be another major focus: helping SMEs access capital through alternative finance.

It is a pivotal time for the country’s small businesses, and their development needs to be nurtured. According to the Federation of Small Businesses, SME confidence is at record levels and, if this optimism is to be turned into real growth, there has to be more action to improve access to cash. And with recent Bank of England data showing that bank lending remains sluggish at best, despite the launch of major SME funds by leading banks, it is clear that the role of alternative finance has to continue to expand.

There needs to be greater awareness and understanding of alternative finance services, such as invoice finance, peer-to-peer lending and crowdsourcing, and the Summer Budget 2015 is a prime opportunity to underline the availability of these products. The struggle to access capital for start-up funding or to maintain cashflow has long been a major impediment to growth for SMEs, with trust in traditional lenders at an all-time low. If the new government wants SMEs to achieve the kind of growth that will help drive wider economic revitalisation, it has to put more weight behind alternative finance.

The UK is being heralded as a global centre for entrepreneurial activity, with SMEs playing a key part in creating this environment, and if the country is going to benefit from this status, start-ups and small businesses must have access to the tools to succeed, including awareness of all sources of funding and the skills to use them. A strong message in the Summer Budget about alternative finance can help achieve this goal.

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