Bank Loans Are The Smallest Proportion Of SME Funding Than Ever Before

The bank being the traditional place to take out a business loan, but now an increasing amount of small businesses are choosing other options for their business finances.

Author: Charlotte Cobley

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Most small business' first thought when it comes to loans are banks, but recently an increasing number of SME's are looking elsewhere for funding.

With this in mind, the government are looking to simplify finance for small businesses, there is a positive future for SME's and funding options. Thanks to the Small Business Enterprise and Employment Bill it has been made easier for small businesses to access funding.

New options

Bank loans are still a major funding to SME's but there is new innovative forms of credit that small business are taking advantage of, such as:

  • Crowd-funding platforms
  • Government programs
  • Equity investment
  • Asset Finance

Alternative funding is entering the market more often, businesses like Crowdcube allows you to invest along side of professional investors in new and interesting businesses in the UK. These are equity investment programs that allow other people to hold shares and investment within businesses to help support them in finances.

Help of the internet

The internet age has helped open up more financial options. Many websites now publish their ideas and gain acceptance and interest from external parties who will then help fund the idea and become an investor. This is a huge advantage to businesses that are selling a tangible product.

Research suggests that banks have not regained any positive confidence and some are still struggling to support small businesses, which leaves businesses with only one choice to look somewhere else for support in financial situations. A strong banking system is vital for a strong economy, increasing competition and new financing options is helping development of new ideas for the next generation of companies that are aiming to help small business' funding. The government is onside and with their help to create exposure to other funding options more businesses will learn there is more to life than bank loans.  

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