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How SMEs can survive high-street bank lending retreat

Access to finance is critical to the survival of small businesses, but this is proving more and more difficult as banks are retreating again from the SME lending space. How can these under-pressure firms safeguard cashflow and keep going?

How the high-street SME finance landscape is shifting

High-street bank lending to small businesses has become an increasingly urgent issue throughout 2023, with complaints from firms growing louder and louder. New research from Bibby Financial Services provides yet more evidence of a significant shift in bank attitudes.

According to the latest SME Confidence Tracker report, over half of SMEs believe it is harder to access finance, with two thirds feeling that banks are less willing to lend to them. In addition, over 40% revealed that established lenders have curtailed their funding this year.

The findings sound a similar warning to that of research from Sonovate. According to the survey, two thirds more businesses are finding it difficult to access finance from high-street banks than they were in 2022. In addition, a report from the British Business Bank has revealed an 11% drop in equity finance for SMEs.

How funding struggles are changing attitudes and plans

The change in the lending landscape has sharpened attitudes toward traditional lenders. For example, according to a HedgeFlows survey of 500 SMEs, nearly three quarters believe that their banks are actively discriminating against them in favour of larger companies.

Worryingly, the survey also revealed that almost three quarters of small businesses are struggling to get a meeting with their bank or financial manager, which is directing affecting investment and growth plans.

Accessing finance and how alternative lenders can help

Problems with accessing finance from high-street banks is not a new issue for small businesses, but given the current economic climate and the significant market headwinds, the timing of the re-emergence of this trend could hardly be worse.

What can these firms to protect their capital base and ensure they have the liquidity to survive? Alternative finance can help.

Services such as invoice finance, asset finance and peer-to-peer lending are proving a vital source of capital for small businesses in the current funding climate. These alternative finance facilities, which offer a more easily accessible, affordable and personalised approach to lending, are helping small businesses survive and target recovery, stability and growth.

This profile has helped cement the reputation of alternative finance in the business sector, with a new study showing that more than 50% of small businesses are looking to use finance to achieve growth in 2023.

Growing SME finance crisis and alternative solutions

Whether SME fears over the availability of high-street business finance are borne out remains to be seen, but it does once again underline the need for alternative solutions. This is why it is vital that business owners and managers are aware of all the finance options available to them, including the services of alternative lenders.

To find out more about A&T Business Associates services, contact Steve Bowles on 01903 602211 or steve.bowles@atbusinessassociates.co.uk.

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