Small businesses need alternative sources of funding - report

13/10/2011

Small businesses are increasingly looking to alternative sources of credit as a result of banks refusing to lend, according to a new report from Simply Business.

Between March and May this year, the amount of money loaned to businesses by banks fell by £4 billion. Lending to small businesses is thought to have fallen by 4.2 per cent and more and more are turning to other options, such as invoice factoring, personal loans and even credit cards to survive.

The Centre for Economic and Business Research (CEBR) found that 47 per cent of small businesses are turning to these options. Simply Business has found that the small business owners are using invoice discounting to access funds that are owed to them in order to keep their cashflow healthy during times when traditional funding is scarce.

Jason Stockwood, the CEO of Simply Business, which provides specialist business insurance products, explained, "For many small business owners invoice finance has been a great option in terms of easing cash flow problems, however it's clear that UK business owners are in need of more credit options - particularly with a view to growth.”