Lack of knowledge of alternative business finance options
A plethora of alternative business finance options has emerged in recent years, throwing a lifeline to businesses struggling to access finance through traditional sources.
However, a survey conducted by the Greater Birmingham Chambers of Commerce has highlighted the acute lack of awareness of alternative business finance options among SMEs in the West Midlands.
The survey unveiled that 41 per cent of respondents had no knowledge of private equity finance, and peer-to-peer lending and crowdfunding were even more of an unknown, with around half the businesses surveyed not being familiar with these options.
Traditional finance options still the first port of call
The survey showed that business owners are much more familiar with the traditional sources of lending, such as bank loans, credit cards and overdrafts. Whilst these finance options are still of course valid and right for many businesses, it seems there is a need for specialist knowledge to help guide businesses into the world of finance options and borrowing.
The new methods that have emerged may seem like a minefield and business owners may shy away from them, finding alternative lending too daunting a prospect.
Low awareness of Government schemes
It seems that Government schemes such as the UK Export Finance and the Enterprise Finance Guarantee also still have very low awareness among businesses in the region. UK Export Finance can help with medium or long-term loans to help businesses who want to export goods overseas but may have to wait for payment, which can significantly affect cash flow. There are also insurance products to protect UK exporters from risk, under the scheme.
The Enterprise Finance Guarantee helps facilitate bank lending to UK businesses that may otherwise struggle to secure funding. Government-backed accredited lenders provide the funds.
Making the most of specialist advice
When seeking finance, whether through traditional routes or new, alternative sources, business owners should seek specialist advice to ensure the option they pursue is the right one for their business and what they are trying to achieve. A solid business plan is required when seeking finance through any route, and help with this from an accountant can be invaluable in helping secure the funding through the most appropriate channel. Utilising accountancy services for more than the usual accountancy functions, and working in partnership with an accountant, can reap rewards for many businesses across a variety of sectors.