A Virgin Startup report says the answer to the lack of SME funding is a mentoring session with Sir Richard Branson. It can’t hurt. But a better solution is alternative finance.

According to the Virgin business support hub, 50% of all adults in the UK claim that a lack of funding is stopping them putting business ideas into action. That’s quite a statement. It’s also a clear message that access to SME funding remains problematic.

New data from Bacs Payment Schemes Limited underline the fact that, for all the new schemes, the old challenges remain. Bacs figures for 2015 show that SMEs in the UK are owed £32.4 billion in late payments and face additional payments of £677 a month as a result.

Think what that money could do for the SME sector and the wider economy. Alternative finance services can help unlock some of this cash. Invoice finance, peer-to-peer lending and crowdfunding-driven success stories are becoming a business news staple, but there is still room for expansion – traditional lenders continue to account for a significant amount of SME lending.

If SMEs are heading for a golden age, as Lord Young has suggested in his government-backed study The Report on Small Firms 2010-2015, a better understanding and greater use of alternative finance are essential. The link-up between RBS and Funding Circle should not represent the zenith of traditional lender thinking.

Election season is just warming up, so we’re likely to hear a lot about SME lending. Alternative finance should be a key topic.

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