Small and medium-sized enterprises (SMEs) represent 99% of all businesses in the UK. It’s a fact which proves they are the lifeblood of our economy.
Together, we have a responsibility to support SMEs as they seek out new growth, expand into new markets, and drive innovation.
However, recent research from Censuswide has found over 70% of small businesses claim their bank neglects them in favour of larger companies.
72% say their bank provides very limited support, and 73% say the struggle to secure a meeting with their bank or financial manager – which may lead to limited scaling and other growth issues.
While the reasons behind this will vary from case to case, it seems a high proportion of SMEs are currently struggling with this more traditional method of financial partnership. Which is why we’ve pulled together some alternatives to help make decision makers more aware of what else is available to them.
The rise of challenger banks
Recent years have seen several alternative funding structures emerge – tapping into the needs and desires of businesses across the UK for a more varied finance offer. Challenger banks like Starling and Revolut have taken the market by storm, and have been instrumental in providing SMEs with more competitive and tailored fee structures.
Upcoming fintech solutions and alternative financial providers point to a coming shift. SME decision makers are expressing their views more and more often and are now seeking new ways to pursue growth.
But what are some of the benefits of these alternatives?
Greater flexibility and customisation of your loans
One of the main sticking points for SMEs is flexibility – the ability to pursue customised finance offers that work for their business. SMEs span sizes, industries and focus – growth is anything but standardised. Any rigidity, from any finance provider, can present SMEs with additional hurdles to cross.
Alternative finance options such as asset finance offer a departure from this norm. Asset finance allows SMEs to agree terms that align with their strategies and growth trajectories – empowering decision makers to harness capital in a way that best suits them.
Move faster, skip the bureaucracy
SMEs thrive on agility. After all, moving fast means staying ahead of the curve.
It’s why many SMEs are turning to alternatives such as angel investors, crowdfunding, asset finance or peer-to-peer lending platforms to move quickly and secure long-term growth.
This acceleration in the funding process enables SMEs to seize growth opportunities and therefore avoid the sometimes-lengthy loan application procedures.
Build relationships you can trust
In the world of alternative finance, SMEs and investors are strongly interconnected. Partnerships are built on trust, and often alternative finance solutions are specifically aimed at SMEs and so better understand their markets and industries.
It’s a factor which is leading decision makers who might be looking to stimulate growth through investment in new equipment, products and services to turn to asset finance, which can provide more flexible terms that suit both parties.
The right relationship can also propel SMEs toward sustainable growth by leaning on the collective experience and expertise of a backer, which specialises in leasing solutions, to help them choose the right path.
Mitigate financial risk
Relying solely on one line of credit can expose SMEs to unnecessary risk.
Diversification is key. Exploring a combination of bank loans, asset finance, and peer investment means that, should one avenue become suddenly less accessible, SMEs can still easily tap into other sources to keep their operations running smoothly.
Play to your strengths, lean on ours
The truth is that different forms of finance work for different businesses. While UK SMEs have expressed some frustration with their banks, there are still many that benefit from this method of raising capital.
However, leasing and asset finance are often overlooked as a way of financing a business – they offer a very good alternative for those seeking new ways to drive growth and innovation.
At GRENKE, the first and foremost service we offer is our attention to developing relationships that last.
In fact, many of our partners have been with us for over ten years. This research from Censuswide has shone a light on just how important close relationships between businesses and lenders can be. Gone are the days of a purely transactional exchange – if lenders want to have a chance of being competitive, they have to provide more than just funds.
Which is great news for SMEs.
If you’d like to learn more about what GRENKE can do to support your business’ growth, explore our website today.