According to the Bank of England, business lending continues to fall. But does this illustrate big bank SME lending policy rather than the health of the small business sector? Start-up investment by Google paints a positive picture – could greater use of non-bank lending, such as invoice finance, be key to future growth?
The Bank of England has announced that lending to non-financial companies for August fell by 2.5% compared to July. According to the bank, the decline has been steady for the past six months, but these figures only tell half the story. While business lending from traditional sources, such as the big high street banks, may be slowing, that doesn’t mean that companies have hit a brick wall in terms of raising capital.
Small businesses are wary of big bank business lending, often wrapped in red tape and unfavourable terms and, as a result, are increasingly turning to non-traditional lending sources, such as invoice finance. As these figures from the Asset Based Finance Association show, the use of invoice finance is growing strongly, led by products such as invoice discounting and factoring.
If more evidence was needed of small business sector vibrancy, then Google’s multi-million pound investment in a technology community centre for start-ups in London is it. The building will provide workspace to new technology companies as well as hosting activities including training workshops and product demonstrations. The move is part of the government’s Tech City initiative.
There is small business growth out there and these companies need business banking services to suit the conditions. This is why more and more of these businesses are turning to non-bank lenders.
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