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SMEs need to learn more about available finance options

Published on 2nd July 2016 - Last update on 13th January 2020

Growing businesses lack the appropriate information regarding their finance options. James Meekings, Co-Founder of Funding Circle, offers reassurance that the £100 million for small UK businesses is safe. However, he has cast doubt upon the EIB lending scheme.  

“That was a start to create a multi-billion pound programme for getting more funds into UK business.” According to Mr Meekings who goes on to express that, “The programme is at risk. If I’m honest, it’s very unlikely to happen now.”

Collaboration and lending

After the announcement of Brexit, offering reassurance regarding funding arrangements was imperative to ensure continued collaboration and lending. “We would expect that from a demand perspective that companies will probably delay making investment decisions and therefore requesting finance as well” explains Marcus Stuttard, chief executive of London’s junior market aim. “The greatest thing we can all do is to remain collaborative, but also to provide as much certainty as quickly as possible,”

However, Rishi Khosla takes on a different approach. The CEO of Oaknorth Banks suggests that education might be the solution and stresses, “A lot more needs to be done, both in terms of availability of finance but also education on the availability of finance. 90% of SMEs simply go to their current account provider for finance and that’s where the education needs to come in: they need to know about viable alternatives.”

Advisers are vital in connecting and pushing growing businesses forward, yet more needs to be done to capitalise on new sources of capital. “There are very good Government incentives like the Funding for Lending scheme” admits Mr Khosla. “But if you look at a lot of plumbing around collateral requirements and haircuts, they significantly disadvantage a new institution such as ourselves that don’t have a back book to pledge as collateral.”

Wading through the sheer amount of various funding options available can be both confusing and intimidating for small, growing businesses. A lot of owners and investors aren’t always sure of how their early-stage business should advance, or what funding options are available and appropriate. “We’ve launched our Elite programme to promote visibility and the profile of businesses that have grown through different forms of finance” asserts Aim’s Stuttard. “A part of that has been bringing together different providers of finance to work together to support businesses.”

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David Harrison

David Harrison

Content writer