Traditional lender caution has long been credited with blunting SME sector growth. Despite efforts to remedy the situation, new research shows that over one million start-ups in the UK have been turned down for mainstream finance. This is why alternative finance is so important.

According to a new study by Amigo Loans, the number of sole traders turned away by traditional lenders has passed the seven figure mark, with these institutions refusing to give nearly a third of companies a bank loan. Worryingly, the research goes on to state that a significant percentage of small business owners that were refused access to start-up finance, used personal overdrafts or turned to friends and family instead.

Is it any surprise that alternative finances services such as invoice finance, crowdfunding and peer-to-peer lending have crossed over into the mainstream and become trusted finance channels for small business owners?

A recent Huffington Tech article by one of the UK’s most famous inventors, Sir Clive Sinclair, in which we are introduced to the new handheld ZX Spectrum Vega+, underlines just how much of the SME finance furniture crowdfunding has become. Notable is his mention of an innovative honey-harvesting start-up that set out to raise $7,000 and ended up crowdfunding nearly $12.5 million. This success goes to show how much start-up funding can be raised with the right strategy.

Of course, it’s not just start-ups benefiting from alternative finances services, it’s up-and-running small businesses looking to maintain cash flow and protect their liquidity that are using them too. What is putting pressure on SME capital? Well, there is a long line of factors but a new CBI report summarises it with the claim that government policies are adding £9 million to SMEs business costs. The reports points to inaction on business rates and the demands of the National Living Wage and the Apprenticeship Levy among other factors.

The UK economy needs SME sector growth more than ever right now and it is clear to see why these companies are crying out for alternative finance services.

To find out more about A&T Business Associates services, contact us on 01903 602211 or info@atbusinessassociates.co.uk.