There is an interesting article in the Daily Telegraph that tells small business owners that sticking with their banks could be bad for business. The headline is overegging the pudding but the article makes good points about funding options and alternative finance.

The article is sponsored content – essentially an advert – for a business bank account online comparison service from Business Banking Insight – but it’s nonetheless a worthwhile read. It is an interesting look at the decision-making process when it comes to opening a business bank account and looking for funding, in particular with regard to how blinkered this process can be and the tendency to miss out on the benefits of considering all the options available, including non-bank finance.

The article recommends that business owners consider challenger banks, which are typically smaller banks with a much greater focus on business finance, and invoice finance, asset finance and crowdfunding services. Peer-to-peer lending can also be added to the list. It makes the point that traditional lenders don’t always offer the best deal for small businesses, and other services may be a better fit. Of course it’s going to say this as an advertorial for a business bank account online comparison service, but the point is valid nevertheless and well worth underlining.

What should be added here is that it doesn’t have to be one or the other, high-street bank small business services or invoice finance or peer-to-peer lending. It can be both. A small business finance strategy can and should integrate bank and non-bank services finance, using facilities from both sectors when appropriate. This brings us back round to the importance of small business owners making use of the full range of funding options available to them (and of their awareness of and confidence in these services).

More and more small businesses are using alternative finance and this article offers an insight into why, albeit in advertorial terms. There’s no getting away from the fact that times are challenging for SMEs – just look at the list of established high-street names that are struggling – and the likes of invoice finance and peer-to-peer lending offer small businesses an alternative means of raising start-up funding, capital for investment and safeguarding cashflow.

This is how a small business in Sussex used peer-to-peer lending, through a commercial finance broker that specialises in alternative finance, to get the money to buy new equipment.

The small business finance sector is amidst a period of radical change, with alternative finance taking more and more market share from traditional lenders. And what the Daily Telegraph article helps to underline, in particular with its reference to changes in behaviour patterns relating to choosing business bank services, is that this evolution is far from over. The popularity of alternative finance is set to grow and grow.

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