For businesses searching for finance, the process can be as simple as a search on Google, but when it comes to actually securing it, is it that simple?
Gloomy results from the Office of National Statistics (ONS) showed that approximately only 40-45% of start-ups live past their 5th year. On average figures imply that 80-90% of SMEs die out because of cash flow due to late payments from customers, and the slow process of accessing finance.
If it is accessing finance (perhaps by the bank) that is causing your business to gloom, then there are other ways to secure finance, for example last year the Government announced their Bank Referral Scheme which ensures high-street banks are passing details of business loans that have been declined onto the alternative lenders. It’s hoped that this will speed up the process and allow more SMEs to access the finance they need.
However, stats have also shown that the productivity output throughout the UK has been a worry for quite some time now and the stats displayed by the ONS revealed the gap in productivity at its largest since the early 90’s. Figures to back this show that hours of output dropped by 18% under the average outstanding six members of G7 group of industrial nations 2 years ago. Experts reveal that they do not believe much has changed.
Head of Businesscomparison.com, Philip Brennan shares his view;
“Commercial lending is always going to be harder to underwrite than individuals. To start with, credit reporting is currently nowhere near as comprehensive as it is in the retail world so, building up a picture of business via credit score for example is not an effective tool. This does not however excuse the average time taken for banks to underwrite their customers; they are the ones that should know their customers best.
“However the Bank Manager relationship no longer exists, and most businesses I speak to have had a very little contact from their bank. The Fintechs that are coming up are offering alternatives solutions and they can be quicker than banks. Some, however will be more expensive than what the bank will offer. However, your rate is based on your risk and the reason you’re often looking at alternatives is because your bank won’t lend to you so you will need to pay more to borrow from an alternative lender.
“In summary access to finance is getting better because of the alternatives available however, the process is still far from being as efficient and simple as it could be. With all the Fintechs and CMA out there working hard to change this, I am sure the landscape will look very different in the next couple of years.”