When seeking finance, most small businesses will head straight for the bank, even though a bank’s processes can be laborious and time-consuming – and if rejected, 40% will give up their search completely. This rut that small businesses find themselves stuck in – added to their hesitance to explore other more suitable finance options – is a problem. Research from Everline, the digital lender for small businesses, shows that more than a quarter of SMEs say the lack of access to cash is restricting business growth.
The Government clearly recognises the need for change – as shown by the legislative action now underway with the Small Business, Enterprise and Employment Bill. This will help match SMEs rejected for funding by their bank with alternative finance providers and will also require banks to share small business credit data with non-traditional lenders.
This new access to SME credit data for alternative providers will help digital lenders such as Everline to continue to make responsible lending decisions, and be more supportive of small businesses seeking finance. One of the most valuable data lenders can use to gage whether they are able to lend to an SME is bank statement data which paints a picture of their financial status. Increased access to this will thus improve lending decisions.
Although there is a growing number of alternative finance providers which may be willing to lend and which might offer more suitable products, small business owners often aren’t even aware of their existence and of what they can offer.
Alternative lenders aren’t there simply to serve the needs of those declined by banks – they are an alternative option that might actually be better suited for your business’ needs.
Alternative lenders such as Everline can offer a fast and flexible solution for small businesses who need urgent, short term finance to help their business grow. Everline uses data to inform lending algorithms, focussing on director and business checks, including Companies House data, payment history and many more. The online application takes about ten minutes and once approved funds are sent within five minutes.
Small business owners can draw real benefits from the Government’s ongoing support to ease their cash flow worries. Understanding the upsides of alternative finance could ultimately help you fill in the gaps where traditional financing routes let you down. Most importantly however, these proposed changes will open up the market and give small business owners better control over their finances and how they access funding.
Russell Gould, Managing Director, Everline