The growing gap between mainstream lenders and business

The effects of the Banks tightening up their risk appetites has been felt across the full spectrum of businesses, from small businesses to the mid-market.

Bank lending has been in steady decline over the past few years due to unsavoury economic conditions and consumers having to navigate their way through obstacle courses of red tape in order to qualify for Bank finance.

2500 FDs are interviewed every year by Pearlfinders to investigate the challenges they are facing. This year, 22% of businesses that are engaged in fundraising are turning to brokers and 14% are looking to VCs.

A perfect demonstration of the damaged relationship between High Street Banks and small businesses is the way in which SMEs are looking more and more towards alternative finance.

SMEs are responsible for 65% of innovation, 69% of apprenticeships and 84% of job creation. SMEs are responsible for half of the UK’s annual GDP.

A recent development in Banking has seen the them engage in a referral service, whereby SMEs that don’t meet their lending criteria can access small loans from community development finance institutions (CDFIs) – usually backed by the government.

Its tough to predict the long term affects of the current poor access to Bank funding for the UK’s SMEs. FDs are reaching out for suppliers of finance to help with the problems they’re facing, including fundraising, cash flow management and taxation.

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