Why Don't SMEs Trust Traditional Lenders? | Compare Business Costs Online Today

Why Don’t SMEs Trust Traditional Lenders?

Brendan Mann
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A recently released BDRC report shows that 8 out of 10 UK SME businesses are reluctant to apply for new finance because of the uncertainty surrounding Brexit. The report also highlights an even bigger reluctance to deal with traditional lenders.In reality, Brexit can be used as an excuse for anything. The facts are that banks are lending and businesses are borrowing. Obtaining business finance is now about.speaking to the right people. 

The EDRC report also 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 report shows with clarity. The need for businesses to have a greater understanding of the finance alternatives available to them. Before they go to the market and start looking for a financial lender.

Business owners need to look at 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 need a greater understanding of the financial market. With guidance on who to approach for finance.

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A research report issued by a leading invoice financing company identifies a growing trend for businesses looking 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.This is perfectly understandable. What business owners need to consider. Is the fact traditional lenders also have alternative lending facilities.

Of the 502 businesses surveyed for the BDRC report. Only 15 stated that they trust traditional lenders in the financial sector. This report makes it clear. Unfortunately, the report does not go as far as asking why they don’t trust traditional lenders. And when they contact one last.

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.This is a practice that is not recommended or encouraged by any financial lender or business advisor.


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