Historically, SMEs have been able to rely on banks and traditional lenders to fill the funding gaps that all small business owners are familiar with.
However, the latest Business Finance Review reveals a drop in the number of loan applications submitted by business owners.
Gross lending via loans and overdraft facilities was at £5.1bn in the second quarter of 2022. This figure decreased dramatically for the third quarter, with gross lending hovering around the £4.5bn mark.
How Can Small Businesses Access Finance in 2023?
Luckily though, there are now alternative sources of finance much better suited to the fast-paced needs of small businesses in the UK.
With banks often unwilling and unable to offer loans to SMEs without significant personal guarantees and liabilities – paired with the months it typically takes for an application to be assessed and for finances to be issued – alternative business funders offer innovative financing solutions for small businesses.
Stephen Pegge, Managing Director of Commercial Finance at UK Finance, highlights that demand has been “stronger for products which help with cash flow management, such as overdrafts and, more notably, invoice finance and asset-based lending products.”
Additionally, lenders offering royalty-based funding have proved popular amongst business owners seeking assistance with their business cash flow.
This type of business funding is intrinsically linked with a company’s sales. Affordability for funding is calculated upon the business’s overall health and average monthly sales.
The business’s future sales act as the funding collateral, meaning that there is no need for personal guarantees or collateral to be posted.
Moreover, business owners need not worry about hidden fees or compounded interest, as alternative lenders like Got Capital offer clients a fixed repayment fee. The repayment schedule is flexible and calculated in a way that is both manageable and sustainable for the business.
Most importantly, funding can be issued on the same day as the application has been received, with no restrictions on use, no need for a complex business plan, and no minimum credit score for applying.
“SME growth plans and investment are likely to remain cautious over the coming quarters. The recent energy support package from government will help businesses manage some of the near-term cost pressures. In addition, data continue to point to a good degree of headroom across existing facilities and deposits”, remarked Pegge.
Continuing, he said that businesses that need “further finance support, whether that be to manage existing obligations or for new opportunities, are encouraged to have an early conversation with their lender.”
Small businesses access unsecured, fast funding from Got Capital. As an alternative lender, Got Capital offers financing solutions specifically designed for and catered to the needs of SMEs.
