Small Businesses Struggle to Secure Finance
Businesses paid back £4.3bn more in loans than they borrowed in the last three months of 2013. Small businesses seemed to be the worst hit by these occurrences even though the Bank of England put measures in place to improve lending for SMEs. Today, it remains tough for a small business to secure vital funding from a high street bank. Small businesses have traditionally been reliant on high street banks for loans but many do not even bother approaching these lenders anymore as they assume they will not meet the criteria set up by lenders such as credit history, turnover, and trading history.
Where to Find a Business Loan?
However, traditional bank loans from high street banks are no longer the only option for small businesses. Alternative funding options are available for companies needing finance that may have been turned down by traditional lenders. For example, when looking for business loans UK companies have options from alternative lenders that can provide funds for businesses that may have been turned down by the major banks. Loans are available over the short or long term for companies with a less than excellent credit history, and a lack of trading history. Many firms need business loans during the early period of setting up a company and this is precisely the reason they are often turned down for a loan – lack of financial history. Alternative lenders do not always want more than six months of trading history from applicants. Small businesses looking for funding should pay attention to all options when searching for viable ways to raise capital.
What’s the Future for Small Business Loans?
Experts state that the Bank of England should expand its efforts to increase the amount of credit available for small businesses in the UK. As economic conditions improve, the market for lending should also improve, with small businesses being able to take advantage of new lines of credit from new and traditional lenders. Small businesses rely on loans to expand or to develop new services or product lines. The success of small business generally in the UK is based on availability of affordable funding and without it businesses struggle to progress. Without access to funding, businesses often cannot grow and cannot get past the initial stages of set-up, which are unlikely to be profitable