It’s that time of year – a time to look back and ask whether small businesses have seen an improvement in access to SME finance. The answer is that it has been the year of invoice finance and alternative lending.

A new report from the European Commission and European Central Bank offers a timely reminder of the state of small business funding: of the SMEs in the EU surveyed, a third said that they did not get access to the full financing that they had planned for in 2013.

Focusing on the UK, the percentage is likely to be significantly larger – recent calls to freeze business rates and cut energy costs from, among others, senior figures in the retail industry, the manufacturers’ organisation EEF, the British Chambers of Commerce and the CBI, are indicative of the position that small businesses find themselves in despite the government’s efforts to improve access to SME finance.

While the Funding for Lending scheme has given mortgage lending a shot in the arm, its impact on small business lending has been minimal, thanks in part to continued caution from traditional lenders. In addition, little has been seen from the much-heralded British Business Bank, although a new £45 million small business funding package suggests some action at last.

As bank lending has remained out of reach or unfavourable for many SMEs, so interest in non-bank SME lending has grown rapidly – this is why 2013 has been the year of alternative lending. The sector has expanded markedly, led by the likes of invoice finance, whose flexibility, transparency and affordability have offered SMEs a financial lifeline.

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