Digital Transformation » Technology » Credit Management » Why alternative finance is on the rise

Why alternative finance is on the rise

The challenges brought by Brexit may be catalyst for seeking new funding arrangements, says John Onslow, CEO of asset-based-lender Independent Growth Finance (IGF).

Brexit has dominated the political and business headlines for more than two years. Yet still thousands of UK business owners across the country remain unclear on what the impact on their business will be.

Regardless of the uncertainty ahead, SMEs are not letting it affect their growth aspirations. In uncertainty lies opportunity, but it will need quick, flexible funding if SMEs are to take advantage before the moment is gone.

Flexible funding key to double digit growth for SMEs

As we make our way towards March 29 and beyond, banks are likely to become more cautious and decisions are likely to take longer. In an environment where the inability to forecast is among the top Brexit challenges, these delays could cause catastrophic damage to businesses.

Yet Independent Growth Finance’s (IGF) research shows SMEs are not going to wait around. Almost a third (31%) would change their funding provider for flexible or bespoke funding options while 22 percent would turn to other forms of finance if they were offered a quick decision.

In true British spirit, many UK businesses are feeling bullish about Brexit. Optimistically targeting ambitious growth in 2019. We surveyed 500 UK business leaders and found that more than a quarter (27%) are forecasting double digit growth this year. The right funding is going to play a vital role in enabling investment in key areas what will help them achieve this growth.

Asset based finance generates vital working capital

While traditional bank funding remains a top source of finance (65%) for most organisations, more than a quarter of SMEs say they now use invoice financing and asset based lending. Both can offer potentially faster, more flexible financing decisions.

Alternative finance options go beyond the three traditional asset types; stocks, bonds and cash. For example, financial decision makers can obtain a variety of benefits from asset based lending, including improved liquidity, flexibility and quick finance to balance their books.

Brexit has the potential to impact businesses causing temporary cash flow issues. As consumers become more cautious they are likely to purchase less. Resulting in businesses holding more stock than they need. This ultimately impacts cash flow. Asset based lending has the ability to offer businesses a lifeline and generate vital working capital.

Know your funding options within 48 hours

During 2018, over half of businesses had to wait at least a month for a funding decision, while others waited three months or more. With so much economic change on the horizon businesses will need to adapt to sudden changes and challenges. Resulting in a greater need for quick, flexible funding.

An experienced alternative lender will be able to assess very quickly what a businesses’ funding options are. At IGF we believe that it is essential to get deals in front of the decision makers within 48 hours. We can’t say yes to everything, but, if we can’t say yes, we will say no quickly. This approach comes down to genuine empathy for British business owners.

There is no doubt that 2019 will be challenging for SMEs. Business leaders will continue to lay awake at night worrying about Brexit developments, however that isn’t going to stop them looking ahead and taking control of their future. SMEs are the lifeblood of our country and, in our experience, they don’t stand still.


Was this article helpful?

Comments are closed.

Subscribe to get your daily business insights