Small business optimism has been growing gradually in recent months and news of GDP growth in Q1 2013 will help bolster confidence. So, how can these green shoots be made to bloom? Bank lending is set to rise but invoice finance has a key role to play.

On the back of stronger-than-expected GDP growth for the first quarter of 2013, independent forecaster Ernst & Young ITEM Club has published a report that predicts that UK business lending will grow by 3% to £440 billion in 2013 and by 8.5% to £447 billion in 2014.

So what will be driving this growth in business lending? A thawing in attitude by traditional lenders will play a part, not least due to the extension of the Funding for Lending scheme, but the continuing success of alternative finance, including invoice finance, is critical for business sector growth and the reinvigoration of the UK economy.

Notably, there remains much debate over the impact of the Funding for the Lending scheme, even following the decision to inject an extra £20 billion. While some believe that the scheme will have a major effect on SME lending in the short term, others suggest its role will be smaller with a general upturn in confidence among banks having an equally as important role.

Wherever the truth lies, it is clear that access to SME lending remains challenging and that small businesses are continuing to tread a fine line when it comes to generating start-up funding and maintaining cashflow. As this Microsoft infographic suggests, monitoring cashflow is crucial to business success.

It is also clear that the way to improve access to small business finance is not solely through traditional lenders and traditional lending. Alternative SME lending, led by invoice finance, provides invaluable flexibility and transparency, and with a British Business Bank due in 2014, its role is only set to grow in the short term.

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