The decision to further expand the Start-Up Loans scheme to make more funding available from high street banks underlines the importance of the invoice finance-led alternative finance market.

The announcement by the Start-Up Loans Company that entrepreneurs who have set up a business using the scheme will be able to bid for funding worth up to £25,000 from Santander is welcome news for SMEs. It is a clear sign of the scheme’s success but also, crucially, of the indispensability of alternative finance: the scheme is providing a highly qualified gateway for high-street SME lenders.

Of course, the latest expansion of the Start-Up Loans scheme is relatively small scale and the availability of funds is comparatively limited in its scope, but there is potential for growth and for improving access to SME finance, which is a development that must be applauded.

However, for all the efforts of the Start-Up Loans scheme and other alternative finance initiatives, small businesses continue to find securing SME finance a challenge, not least as high-street lenders remain cautious with regard to small business credit. New data from the Federation of Small Businesses and Experian showing that SMEs spend half a billion pounds on tax administration every year and that three quarters of SMEs lose money as a result of customers being insolvent underlines the pressure the sector is under.

That high-street lenders remain guarded in terms of SME lending – of which the development of the Start-Up Loan scheme arguably demonstrates – illustrates why invoice finance and other leading alternative finances services have entered the mainstream and why they continue to go from strength to strength.

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