Although we are supposedly well into economic recovery, small businesses are still finding it hard to access the revenue they need to develop. Sometimes they need funds just to get them over a slump and survive, and this seems to be even more difficult.
There are many new options from which investment can be sourced, yet outsourced bookkeepers agree with the Business Secretary, Vince Cable, who recently said that “small businesses often give up if they are turned down for finance by their bank.”
Banks to Be Forced to Give More Help
In his March 2014 budget, Chancellor George Osborne mentioned plans to make banks do more for these small firms. They would be obliged to give them the option of being referred to an online platform giving access to alternative lenders. These will include crowd funding and peer-to-peer lending websites, invoice finance companies and some of the new challenger banks.
An announcement from the government on August 6 included proposed legislation on this as part of a new strategy to encourage more innovation in finance. It is one of the first steps in a campaign to make the UK a global centre of financial innovation. A full strategy document will be published shortly.
Boosting the Alternative Funding Sector
The alternative funding market grew significantly in 2013 to be worth almost £1 billion, and its value is expected to reach around £1.6 billion in 2014. This is a trend that the government wishes to promote and exploit.
To encourage the evolution of the financial technology (FinTech) sector, the Chancellor launched a new body, Innovate Finance, which already had 53 members, and which CEO Claire Crockerton believes will soon reach a membership of 200 companies in the sector. Innovate Finance and the Business Bank will be sponsoring new prizes and awards for those who manage to provide solutions to meet a challenge or problem in granting small businesses access to alternative funding.
The announcement also referred to a further £1 million for the British Business Bank’s investment programme, designed to help small businesses generally, plus the FinTech sector specifically. Ministers will also be looking at the potential advantages of using virtual and digital currencies such as Bitcoin, as well as the risks involved and how to regulate them.
Until the proposals to make the banks more responsive to their customers’ needs for finance come into force, your outsourced bookkeepers will advise you not to give up if your bank won’t help you. The many other ways to access funding are growing day by day. You just need to keep trying.
