Do you remember when business finance used to be a case of talking to your friendly bank manager and asking for some help?
Maybe you remember the days of playing golf with the bank manager, talking about what you want to do and being a reliable member of the community really counted for something?
Sorry to break it to you. The world of business finance has changed and it is not going back.
The Big Business Finance Change Since 2006
Since around this time banks in the UK started to withdraw authority from the local bank manager and place it with separate credit teams. This was driven by regulatory recommendation and a conflict of interest on the front line.
By conflict of interest we refer to targeting bank managers to lend more money, and at the same time expecting them to pick and choose where to grant business finance.
The thing is, businesses remained committed to talking to the bank manager and expecting support, meanwhile the UK banks continued to promote customers being treated as individuals and really pushed the advantages of local managers and local decisions.
This meant the confusion between business customer and bank became exacerbated, which was not really that surprising.
How This Changed The Future Of Business Finance
So, we have the confusion of the above, the mixed messages and a real disconnect between business bank and business customer.
The thing is, that rather than seek to address this disconnect, the UK business banks have continued not to see the real issue of badly promoted messages, meaning business bank and business customer continue to work in different directions.
What this has done is leave a nice meaty gap for innovative and new business finance companies to exploit.
The Future Of Business Finance, What Comes Next
These are all options in the market for small businesses, limited companies, partnerships and SMEs. See how you think they compare to old fashioned bank business loans;
- Businesses can now borrow up to £150k without needing to put their property up as security
- An answer within 48 hours should be considered a long time
- Loan forms delivered by email, scanned copies of agreements accepted in return
- Your card machine (streamline/ pdq etc) can be used to secure a loan
- Any direct debits you take can be used to borrow against
- The Start-Up loans company provide access to up to £20k for new businesses
- You can take funding and repay with goods or recognition rather than paying ANY interest cost
- Up to £500k loans based on turnover, not a P&L
The message is that the days of going to your business bank as your first, maybe only, business finance option have gone and with the growth of alternative lenders those days may be gone for good.
Don’t get left behind in the new business finance world.
Any comments then please add them below, or give Lime Consultancy a call on 01293 541333.
By Dave Farmer