SMEs Do Not Trust Traditional Lenders To Support Their Businesses But why? | Compare Business Costs Online Today
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SMEs Do Not Trust Traditional Lenders To Support Their Businesses But why?

Brendan Mann

A recently released BDRC report shows that 8 out of 10 UK SME businesses are reluctant to apply for new finances as a result of the uncertainty surrounding Brexit. The report also highlights an even bigger reluctance to deal with traditional lenders.

In stark contrast, the report shows a desire in the SME community for growth. With 45% of businesses stating they plan to invoke business growth plans in the next 12 months. The contrasting statistics generated by the report highlights a trend in the business community to shy away from traditional lenders and study the alternatives.

Business owners with ambitions of growth need to take a close look at the financial options available to them. In order to ensure they are getting the most from their lender. Not only in terms of a repayment structure. But also in identifying a financial partner that can add value in the long-term

With such a high number of businesses revealing plans for expansion in the next 12 months. It is clear the majority of those businesses will require some kind of financial support. With almost half of those businesses expressing a desire for growth. Also stating a reluctance to deal with traditional lenders. It is increasingly clear that businesses require a direct link to alternative finance solutions.

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A research report issued by a leading invoice financing company identifies a growing trend for businesses to look at alternative financial agreements. The report shows 53% of businesses see owing as little money as possible as a key requirement in their business planning. The problem with traditional lenders is that they offer the “all or nothing” approach to lending. This goes against market trends. As business owners have a strong desire to structure lending and where possible leverage that lending against guaranteed income streams.

Of the 502 businesses surveyed for this report. Only 15 stated that they trust traditional lenders in the financial sector. This report makes it clear. That unless businesses have access to alternative lenders. The SME business market in the UK will stagnate due to a lack of growth created by limited amounts of funding being pumped into the sector.

Another concerning statistic generated from the report showed that 20% of business owners would rather use personal credit cards or take out personal finance to support their business. Instead of using traditional financial lenders.

It is clear there is a lack of understanding within the small business community on alternative finance. With less than 15% of business owners stating that they had a clear understanding of alternative finance solutions.

Over 90% of the group surveyed. Stated they would welcome a greater understanding and the ability to compare alternative lending solutions through a single gateway. While stating that traditional search engine research was not effective in identifying financial partners. Due to being corrupted by the large amounts of money traditional lenders spend on advertising.


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