Although
we are supposedly well into economic recovery, small businesses are still
finding it hard to access the revenue they need to develop. Sometimes they need
funds just to get them over a slump and survive, and this seems to be even more
difficult.
There
are many new options from which investment can be sourced, yet outsourced bookkeepers agree with
the Business Secretary, Vince Cable, who recently said that “…small businesses
often give up if they are turned down for finance by their bank.”
Banks to Be Forced
to Give More Help
In
his March 2014 budget, Chancellor George Osborne mentioned plans to make banks
do more for these small firms. They would be obliged to give them the option of
being referred to an online platform giving access to alternative lenders.
These will include crowd funding and peer-to-peer lending websites, invoice
finance companies and some of the new challenger banks.
An
announcement from the government on August 6 included proposed legislation on this
as part of a new strategy to encourage more innovation in finance. It is one of
the first steps in a campaign to make the UK a global centre of financial
innovation. A full strategy document will be published shortly.
Boosting the
Alternative Funding Sector
The
alternative funding market grew significantly in 2013 to be worth almost £1
billion, and its value is expected to reach around £1.6 billion in 2014. This
is a trend that the government wishes to promote and exploit.
To
encourage the evolution of the financial technology (FinTech) sector, the
Chancellor launched a new body, Innovate Finance, which already had 53 members,
and which CEO Claire Crockerton believes will soon reach a membership of 200
companies in the sector. Innovate Finance and the Business Bank will be
sponsoring new prizes and awards for those who manage to provide solutions to
meet a challenge or problem in granting small businesses access to alternative
funding.
The
announcement also referred to a further £1 million for the British Business
Bank’s investment programme, designed to help small businesses generally, plus
the FinTech sector specifically. Ministers will
also be looking at the potential advantages of using virtual and digital
currencies such as Bitcoin, as well as the risks involved and how to regulate
them.
Until
the proposals to make the banks more responsive to their customers’ needs for
finance come into force, your outsourced
bookkeepers will advise you not to give up if your bank won’t help you. The
many other ways to access funding are growing day by day. You just need to keep
trying.
