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SME finance without the bank bother

With an unsteady economy and further uncertainty around the UK’s impending exit from the EU, small businesses appear to be wary about borrowing money. Johnson Reed managing director, Mark Johnson, investigates the current trends in the lending market.   

According to the FSB Small Business Index (Q3 of 2017), there was a sharp decline in successful credit applications, with only 63% securing external finance. However, the report found that only 12% of businesses surveyed applied at all, suggesting a significant proportion of SMEs are staying away from external finance altogether.

A lack of cash flow within the small business community results in less investment in growth, fewer job opportunities and fewer businesses making the transition from small to medium-sized. So why are small businesses so wary of using external funds to support their development?

There’s still a chance that businesses carry misconceptions about lending. After the financial crisis lending conditions were very harsh and some small businesses remain sceptical that they will even be able to secure finance. One of the questions we get asked most frequently is ‘Am I eligible?’ In most cases, the answer is yes!

There is evidence to suggest that lenders are taking a more cautious approach, with some banks tactfully withdrawing overdrafts to protect their own ratings and closing their doors to new applications. In fact, The British Business Bank estimates that approximately 80,000 SME applications for debt finance were unsuccessful (Small Business Finance Markets report of 2016-17).

However, it’s important for businesses to remember that banks are not the only feasible source of finance. The lending market is currently very healthy, with competitive rates and ‘cheap money’ providing appealing opportunities beyond bank borrowing.

As a result, Johnson Reed have enjoyed another record-breaking year, with our acceptance rate reaching an exceptional 93%. Despite the faltering economy, asset finance is continually on the rise, with the Finance and Leasing Association (FLA) reporting the industry is on-course to reach a record level of annual new business in 2017 of around £32 billion.

We aspire to be in-tune with the SME market and we’re constantly on the lookout for ways to adapt to meet your business’ needs. Whether you’re looking to take the strain from a corporation tax or VAT bill, or simply inject more funds into your business, Johnson Reed’s unsecured loan facilities are designed to improve your liquidity, without the long or tedious application process.

If you’d like to explore our independent finance facilities in greater detail, simply get in touch on 0161 429 6949. Our simple application, speedy turnaround and competitive rates guarantee you an excellent alternative to bank funding!   

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