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Are SMEs still in the dark about funding options?

While the British Business Bank has reported a significant rise in SME lending, a new report suggests that access to funding remains a major headache for small firms. Is the problem partly that owners aren’t aware of all the options?

The British Business Bank has reported a huge increase in small business lending, up 24% to £9.2 billion over the last 12 months. Given the pressure on small business owners, the news is encouraging and suggests government efforts to improve access to SME finance are paying some dividends. The Bank offers a wide range of finance options, including alternative finance.

However, at the same time, in a new survey from Hiscox, over one third of the small businesses interviewed stated that concern about the lack of funding options. It also revealed fears that funding is being eroded by Brexit, with almost 40% of the companies questioned reliant on EU funding.

This news suggests that despite the rapid growth of new finance services for start-ups and existing small businesses, such as crowdfunding, peer-to-peer lending, invoice finance and asset finance, awareness of these options remains an issue. According to the Hiscox survey, most small businesses still rely predominantly on banks for finance.

Hence, these recent events suggest that more needs to be done to promote the alternative finance services that are proving a lifeline to small business owners in the know. Who should be doing the promoting? Both the public and private sectors should be investing.

The government has a duty to inform small business owners of all the funding options available to them and the activity of the British Business Bank is a sign that it is getting the message across. However, it is also clear it needs to ramp up its efforts. At the same time, industry organisations and private sector bodies should also be doing their bit to educate small business owners about the range of finance services they can call upon.

As the cloud of Brexit-borne uncertainty grows thicker and more disruptive, it is hugely important that small businesses are able to maintain forward momentum. It is clear that alternative finance has a key role to play, but if awareness is limited, it can only help so much. More investment in promotion is vital.

To find out more about A&T Business Associates services, contact us on 01903 602211 or info@atbusinessassociates.co.uk.

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