Educasting small businesses on their fiannce options is vital for growth

In our latest comment piece in City AM, Managing Director Peter Alderson looks at the latest small business finance reports and what the outlook is for SME growth in 2018.

On Tuesday, the British Business Bank (BBB) published its fourth Small Business Finance Markets report. With the growth and productivity of our smaller businesses central to improving the performance of the wider economy, making sure that these businesses have an effective supply of funding is increasingly in the spotlight and so it was good to see continued and welcome growth in finance to smaller business, both through traditional channels and with a notable, double-digit growth in alternative funding channels, while net bank lending remained relatively flat in comparison.

Although traditional banks are still the predominant source of finance for the UKs smaller businesses, I was encouraged to see an increasing trend for exploring the alternatives, with more and more business owners looking elsewhere to meet their growing and often varied funding needs.

Another positive was the fact that most smaller businesses expect no impact from leaving the EU despite a drop in those thinking they’ll grow more in 2018. The survey showed a small decrease in the proportion of smaller businesses expecting to grow in the next 12 months, from 37% of SMEs in 2016 to 35% this year. The FSB Voice of Small Business recently detailed that just under half of small businesses expected to grow over the next year, I for one would like to hope for the latter.

Access to finance remains a critical barrier to both growth and success for many small business owners, across all sectors and making finance more readily available is something that must remain firmly on the agenda of providers.

With almost half of first time applications for business bank loans and overdrafts still being declined, more work is necessary to raise awareness amongst smaller businesses on the increasing number of finance options they have available outside of the traditional banks, and to give them confidence in using this finance to fund their growth ambitions.

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