SMEs need the backing of alternative lenders now more than ever

At a time when only a staggering 5% of businesses would ‘shop around’ after being denied finance by their own bank, Ed Rimmer, CEO at Time Finance, shares his thoughts on how vital alternative lending is for businesses and the need to drive awareness of its potential.

Ensuring finance solutions are kept readily available to SMEs is vitally important; without accessible finance for brokers and their clients, many businesses risk putting their growth and investment plans on the back burner, which can be detrimental to our economic growth.

A recent report from The House Of Commons’s Treasury Committee claims that only 5% of UK businesses would look elsewhere after being denied the full amount of finance from their own bank. These figures are staggering, particularly when there are so many more options for businesses seeking finance – and we know firsthand the support and flexibility that the alternative lending market can offer.

SMEs, which make up 99% of our economy, are the backbone to economic success, and without their investment and growth the economy as a whole will suffer. We need to give our business community the confidence to take measured risks, to invest in their assets and build strong foundations for growth. Many SMEs rely on leased equipment, and the alternative lending market is the door that remains open – but it’s vital that businesses know we are here.

In its report, The Treasury Committee found that more than 140k small businesses had their bank accounts deactivated last year, often with little notice or explanation. Three of the big banks have attributed this to ‘risk appetite’, which is to be expected from traditional lenders when economic growth is faltering.

It was also stated that the success rate of applications for ‘bank loans fell from 80 per cent in 2018 to around 50 percent in 2023’. What’s evident from these findings is there is still an appetite for finance, and it is up to the alternative market to help plug that gap, and make sure these options are readily available and accessible to businesses who find their options depleting.

When the economy shrinks or stands still, many businesses find that lending can become more risk averse, and meeting lending criteria can become much harder for businesses. This is where alternative finance plays a vital role. We have the ability to be much more flexible and innovative in the solutions we offer to businesses, and have more in-depth conversations about a business’ circumstance and affordability.

Time Finance supports some 11,000 UK SMEs via asset finance, invoice finance, vehicle finance and ABL facilities. With a people-led approach, we can focus on upfront conversations and gather a great understanding of each business’s unique circumstances, before making a decision. Preventing viable businesses from laying dormant or worse, folding under, is essential to a healthy economy, which is why we continue to take an individual approach to funding solutions.

With understanding and adaptability at the forefront of all of our conversations with brokers, the alternative market can continue to offer solutions that fit individual needs and equip businesses with the tools they need to continue to invest in their growth.