One third of SMEs forced to pause business through lack of funding
The word of the year has been 'change', and for SMEs a change in options and attitudes in the lending market has long been something business owners have wanted, needed and asked for.
The state of SME funding
In an article in June, Leasing World quoted research that found nearly a third of UK SMEs "had to stop or pause an area of their business because of a lack of finance over the last couple of years".
Typically, the activities they had to stop were hiring personnel, marketing, launching new products, expanding into new markets and R&D. Meanwhile, the biggest barriers faced by SMEs in sourcing external finance were:
However, most agreed that with the right finance solutions, they could grow their business by up to 29% in the next 12 months. As we’re in a climate where I think everyone can agree the economy could do with that kind of growth, there seems to be something of a disconnect.
A need for lenders that understand SMEs
The difficulty accessing funding, however, is a narrative that's reflected in my own conversations with businesses, relieved to have come across Rivers and its portfolio of loan options designed specifically for SMEs.
As a case in point, the team and I were at an event a couple of weeks ago, and the topic was raised by one of the business owners in attendance. He noted that he had never actually been able to speak to his bank manager.
This is a story that's not uncommon these days, and herein lies an issue because it's not just about loans being available, but that the providers need to be in a position to actually understand the businesses they're speaking to.
To my mind, there is also a second need when it comes to business loans - not only does the lender need to understand smaller enterprises, but the loan products need to be designed to meet the specific needs of SMEs as well.
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Time is of the essence in business finance
On the question of time, on the high street it's unlikely that any loan request will be turned around in a week or less. While that works for some things, it often isn't viable for the realities of running a small or medium-sized business when you're looking for sensible cash flow or business development funding.
While some agreements take longer than others, at Rivers we have had instances where (when the stars align), we have been able to agree a loan and have it paid into the client's account within 24 hours.
It isn't always that quick because we use human underwriting. However, we can move at pace when required and when all the relevant information is provided. That applies especially in the case of our short-term business loans, where SMEs want approval quickly and then have seven days to decide whether or not to take the offer.
The value of repayment terms
The repayment terms are also essential because sensible finance is about helping businesses to run efficiently, effectively and sustainably. As an example, with our new Cash Flow Solution Loans repayments are made at 14-day intervals to allow businesses to fully utilise the benefits of working capital funding.
Business loan flexibility
Flexibility is the other crucial component. Part of the reason we opt for human underwriting is because it's essential to actually understand what a business owner is asking for.
Yes, the numbers need to add up, but if someone applies for an amount and that doesn't work, where a traditional lender might leave the conversation there, we may be able to go back with an alternative approach. We like to understand the business and its goals and try to find a sensible option that will genuinely help them thrive.
Rivers business loans
There are lots of good lenders out there, all offering different things. At Rivers we are a business that offers a range of business funding products created for SMEs. We understand the nuts and bolts of business because we are a business, and we are made up of Business Finance Specialists and trusted business advisors.
Building relationships with clients has made up the entirety of my career, but having been in traditional settings in the past I was often frustrated by the lack of options available for clients. Now I have a spectrum of offerings I can draw upon, and nothing pleases me more than seeing business do well, knowing that I was able to be a small, but helpful part of their journey.