According to a new report from BDRC Continental, SMEs are more reluctant than ever to apply for finance from traditional lenders. That conclusion underlines the importance of invoice finance to the small business sector.

Why are SMEs unwilling to submit finance proposals to banks and building societies? The answer is straightforward – according to the report, it is because they believe they are unlikely to receive a positive response. The findings of the new study are hardly surprisingly, but they do illustrate how obtaining SME finance remains a considerable challenge, despite various government-backed initiatives.

Much has been made of the expansion of the Funding for Lending scheme, and the report states that a growing awareness of this initiative among SMEs is improving the prospects of obtaining small business funding. However, while there is positive talk of short- to mid-term developments, it remains clear that, as far as current conditions go, small businesses are still up against it.

Further emphasising the importance of more immediate action and of invoice finance is more news of rising SME confidence. According to the Federation of Small Businesses, small business confidence has hit a three-year high, a sentiment that has been conveyed by a number of other reports in 2013.

However, in order to turn this confidence into SME sector growth, and indeed wider economic expansion, better small business finance is required. With traditional lenders still dragging their heels, the vital role invoice finance is playing in providing SME finance has never been clearer.

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