A new report from the prime minister’s Enterprise Adviser Lord Young has identified better SME finance as key to economic recovery. The findings of the Growing Your Business study, which have prompted investment of £30 million, highlight the role of invoice finance.

Improving access to small business finance is crucial to economic growth in the UK: this is one of the key findings of Lord Young’s report. Not only does the conclusion put a spotlight on government efforts to tackle the problems SMEs face in obtaining credit, such as the Funding for Lending scheme, which recently received a £20 billion boost aimed specially at small businesses, it also underlines the importance of alternative finance, such as invoice finance, to the government’s economic growth ambitions.

In the face of prolonged caution from traditional lenders regarding small business lending, alternative finance is playing an increasingly key role in generating start-up funding and maintaining cash flow for small businesses. Invoice finance is driving sector growth.

As a result of Lord Young’s report, the government is set to launch a new £30 million small firm mentoring scheme. His recommendations include a voucher scheme that firms could use to access specialist help in areas such as financial management. He has also suggested expanding the government start-up loan scheme, an alternative finance model that has gone from strength to strength in 2013.

As more and more emphasis is placed on small business growth and SME finance, it is clear that invoice finance-led alternative finance has a key role to play in generating economic growth. Whether as part of the new mentoring scheme or the British Business Bank, expect its role to grow.

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