Against the backdrop of continued market uncertainty, bridging the SME lending gap is more important ever in 2018. However, traditional bank loans are the first port of call. How can businesses survive?

Accessing finance remains a major challenge for small businesses and yet a new study has found that despite the rise of the alternative finance sector and a lack of trust in traditional lenders, it is to these banks that company owners continue to turn. According to research from recruitment specialist Tindall Perry, over 80% of financial directors would approach a bank for finance in the first instance.

Interestingly, the study suggests with regard to the reluctance to make use of alternative finance facilities, it is not a matter of a lack of awareness. Rather it is matter of a lack of understanding, in particular concerning peer-to-peer lending and crowdfunding. When it comes to invoice finance and asset finance, there is more understanding of these facilities and their benefits.

So, based on these findings, while raising awareness remains important, there is an urgent need to generate greater confidence in alternative finance services. This puts the spotlight on financial management, both in terms of internal capabilities and external facilities. It seems clear that for businesses to access the benefits of alternative finance, there has been someone inside the company or serving it that is comfortable working with the various services.

This is how a small business in the south of England used peer-to-peer lending, through a West Sussex-based commercial financial broker, to raise £20,000 to purchase new equipment.

And given the current the market conditions, the importance of being able to make use of all the financial options available couldn’t be greater. New research from the University of St. Andrews states that small businesses will be the biggest losers from Brexit. It has pinpointed innovative and export-orientated companies as those that will be hit hardest by lower levels of capital investment, reduced access to external finance and lower levels of internationalisation.

A new Royal Mail survey brings some balance – it says that almost 75% of online SME retailers are expecting an upturn in sales in 2018 – although it is worth remembering that these types of firms only represent a portion of the overall business sector. Also, interestingly, the research states that for SME online retailers that sell overseas, by far the largest market is Europe.

In light of the collapse of Carillion and Brexit-bred market uncertainty, the health of the small business sector is back firmly under the spotlight and survival is very much a matter under discussion for many firms. So, how can companies keep going? Accessing finance is vital and as such, facilitating a better understanding of alternative finance has to be part of the answer.

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