Small Business Finance Answers

Small Businesses Are Growing

“This is the golden age for small firms – there has never been a better time to start and grow a business. Lord Young in 2015 Small Business Report”

Not bad place to start, at the beginning of the golden age.

2014 saw the largest growth in new company registrations at Companies House. It also saw a fall in company failures. The UK continues to claim to be the entrepreneurial capital of Europe. So what is stopping UK SME’s from really growing at the speed they want?

In Lord Young’s report on small firms there were a few pieces that really stood out;

“There are now 5.2 million small firms in the UK and they account for 48% of employment and 33% of private sector turnover. Indeed over nineteen out of twenty firms in the land today employ fewer than ten people…”

The UK is the land of small business. The small business sector is supporting the UK recovery. So what is holding small business back from really making the difference?

Accessing Finance

This seems to be the age old chestnut. That raising finance for your small business is difficult. It is a point I have often campaigned against. Commercial finance isn’t difficult, you just need a little more expertise to succeed at finance raising than you used to.

If you want a full copy of the Small Business Report then the link is below, in the meantime these statistics are taken from the report;

  • The new British Business Bank is making business finance markets work more effectively for small firms. It generated £890 million of new lending and investment in the 12 months to the end of September 2014
  • Encouraging banks to lend to small firms via the Funding for Lending scheme. Participants will be able to earn further allowances by lending to small or medium sized enterprises (SME) in 2015, by drawing £5 in the scheme for every £1 of net lending to SMEs
  • Peer to peer and crowdfunding finance continues to rise, with £1.3bn of transactions occurring in the first half of 2014
  • The Seed Enterprise Investment Scheme is now permanent, and has already helped over 2,000 companies to raise more than £175 million of investment

All positive stuff, which you may expect from a Government requested report. But, there is some truth to the good news.

The alternative finance sector is growing and coming to the forefront of choice for the small business looking for borrowing.

The Financing Issue

This quote from Lord Young backs up so much of what Lime Consultancy, and I, have been saying for ages;

“ shows small businesses’ reliance on their banks for funding – over 90% of loan or overdraft applications are made to a small firm’s main bank.36 In Growing Your Business, I highlighted the removal of bank managers from branches, and the damaging effect this has had on lending decisions to small businesses, based primarily on the personal credit rating of individuals within a business and not on that business’s performance or viability..”

We are in a position where frontline banks have a skills shortage and no real appetite to put resources into helping small business owners.

Fear not, here is why…

The Small Business Solution

The answer lies between in the growth area of alternative finance. Lime Consultancy work with over 200 different small business lenders covering all sectors, areas and types. Could you name 200 commercial lenders?

Probably not.

The solution for small business borrowing lies within these active, want to do business, small business focused lenders. The challenge is in working who to work with and who does what. That is what we do for you, why you should work with Lime Consultancy.

However, sales pitch aside there is some real finance out there for small businesses, it has just moved to somewhere where it wasn’t before.

By Dave Farmer

Lime Consultancy work with small businesses to help them access growth finance, for any comments about this post then add them above. For any general questions then contact us.

For a full copy of the Small Business Report then click the link below, or watch this talk by Lord Young about the Small Business Report 2015.

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