Region’s businesses urged to consider alternative lenders
Dr. Steve Walker is CEO at ART Business Loans, a Community Development Finance Institution (CDFI) which provides business loans in the Midlands and surrounding counties.
“Earlier this month, new research from Time Finance reported that 60% of SMEs are not considering alternative finance options. The survey found that six in 10 UK businesses choose their main bank for commercial finance solutions, and only 27% of those turned down by their banks look elsewhere.
“Following the challenges of Covid-19, many SMEs are now seeking funds to either accelerate future growth or to refinance their pandemic loans. As a lender, we’ve seen an upsurge in demand for refinancing, which is often due to organisations struggling to obtain funds from banks or other finance sources. Last year – for the first time – research confirmed that banks were not the major source of finance for small and medium-sized businesses in the UK.
“It’s therefore disappointing to see that more than half of UK SMEs are curtailing their opportunities for growth by not exploring alternative routes to finance. To meet their financial needs, it’s critical that business owners consider all possible funding options, particularly if they’re not able to secure a loan from their existing bank.
“We know that many SMEs struggle to find appropriate finance to help fuel their future growth, and in a challenging climate, businesses are facing new and increasing cost pressures. To best respond to evolving business demands, it’s important for SMEs to consider all lending options on the table. A refusal from their bank doesn’t have to signal a financial dead-end.
“Intermediaries and banks have an important role to play in signposting businesses to alternative routes if needed. For example, if a traditional lender says no, businesses can speak to their local Community Development Finance Institution (CDFI) to explore alternative options for finance.
“CDFIs are prepared to lend in three key scenarios: 1) when other lenders say ‘no’; 2) when other lenders have already lent all they can; or 3) when they can lend as part of a package alongside other banks or finance sources.
“As well as providing new avenues to finance, CDFIs such as ART Business Loans offer a relationship-based approach designed to meet both a business’ immediate financial needs and long-term plans.
“In commercial finance, there’s no ‘one size fits all’, and as a result, we offer loans ranging from £10,000 to £150,000, as well as partnering with other organisations should further funding be required. It’s therefore vital for local SMEs to consider the full scope of lending options available to them. By exploring alternative funding routes, such as CDFIs, businesses across the Midlands and beyond can benefit from specialist financial support tailored to their unique requirements – setting them on the right track for future growth.”