In the latest Business Finance Bulletin Rob Warlow reviews findings from the recent SME Finance Monitor Report which reveals that demand for finance amongst business owner is low. But what does that do for growth?

According to another survey Rob discusses how many businesses are planning to invest this year but that they have a low understanding of how alternative finance works and how it could benefit them.

If you are looking to raise equity then news of a support program run by Crowdcube to help you through the process.

In the Business Finance Tip of the Week, a clip from a live seminar in which Rob explains how your financial information needs to be kept up to date.

You can access this Bulletin in two ways… watch the video on our You Tube Channel or listen and download the Bulletin to your phone via SoundCloud

The latest SME Finance Monitor Report shows how much the funding and finance landscape is changing with small businesses demonstrating cautiousness and a reluctance to engage in seeking out finance.

One of the key findings from the latest quarterly report, which surveys 5,000 UK small business owners, is that issues around access to finance is now slipping off the list of obstacles to running to a business.

The current economic climate continues to be cited as the main obstacle to running the business in the next 12 months with 17% of SMEs quoting this as the main barrier. In terms of access to finance only 8% claimed it to be an issue (compared to 12% in Q1 2013), which appears to be counter to how much press the relationship between banks and small businesses is given.

Interestingly 65% of those surveyed said they see no major obstacles which could hold them back from going for growth. This is an encouraging sign.

With access of finance being seen as less of an issue than we may think, how does this translate in to actually usage of finance?

The report found that 39% of SMEs were using external finance in the second quarter of 2014, which is in line with most quarters since 2012. This means that 60% of SMEs either fund their business via shareholders/directors or don’t borrow.

In fact 39% classified themselves as a ‘Permanent non-borrower’. These are businesses which have not borrowed over the last five years and have no intention of borrowing over the next three months. The number of small businesses who declare themselves as not interested in borrowing has increased steadily over time, having been 34% in 2011 and 2012.

Even the number of businesses which have not borrowed over the last twelve months is remarkably low. Referred to as ‘Happy non-seekers’ these amount to 78% of those surveyed. So nearly 80% of SMEs are quite comfortable in not borrowing at all. This number is also on an upward trend having increased from 66% in Q2 2012.

You do begin to wonder why so much attention is given to the issue of access to finance when so many businesses declare themselves as not interested! But this does have one implication and that is as to how future growth will be funded. Growth typically needs cash to support working capital and investment needs so it is important for businesses to realise that growth usually needs finance and not to shy away from seeking it out.

Of those who do borrow, the range of finance products they use is also beginning to change. The report found that 30% of SMEs used ‘core’ products (loans, overdrafts and/or credit cards), but this is a declining proportion over time (it was 36% in Q2 2012). Other forms of finance, such as leasing, invoice discounting, private loans and crowdfunding, are being used by 17% of businesses so there is a lot of scope for alternative lenders to grow.

It’s clear that many businesses are comfortable where they are but for them to grow a finance need will kick in and it’s vital they don’t fall into the trap of going for growth with no cash… that can only end in disaster. But there is also a need for all finance providers to ensure that funds are there when needed and sending a clear signal that they are ‘open for business’. We don’t want businesses assuming they will get a ‘no’ and not even approaching a bank in the first place.

We will continue our look in to the findings of the latest SME Finance Monitor Report in future blogs.

In this clip taken from a live seminar Rob Warlow talks about the history of crowdfunding, and how the credit crunch led to the launch of crowdfunding sites.

From raising finance via equity to business loans crowdfunding is a growing alternative to the banks.

In the latest Business Finance Bulletin Rob Warlow looks at the latest bank lending figures from the Bank of England… a mixture of good news and not such good news!

One finance sector which is booming is the Asset Finance industry and Rob looks at the latest growth figures from the Asset Finance Based Association which are in sharp contrast to that of the High Street banks.

Rob also talks about a new crowdfunding site, CrowdProperty which is looking to match private investors with property developers and Buy-to-Let owners on the hunt for finance. One for you to look at if you are in the property game.

And in the Business Finance Tip of the Week a clip from a live seminar in which Rob shares one question that banks will ask of themselves when reviewing your business finance request.

In this week’s Business Finance Bulletin Rob Warlow looks at the impact late payment can have on growth plans with a recent survey from Close Bros Finance demonstrating how it can hold your business back.

Rob also looks at how crowdlending platforms Funding Knight, ReBuilidngSociety and LendInvest have reached new highs and milestones as they continue to challenge the traditional High Street banks.

And in the Business Finance Tip of the Week Rob shares some thoughts in an interview he did on what a good Business Plan looks like.

Small businesses on the hunt for bank finance are seeing a higher success rate in getting a yes than in previous years, with 80% of applicants receiving a positive response.

The survey, carried out by Albion Ventures as part of its annual Growth Report, revealed the success rate had increased from 71% in 2013 to 80% in 2014, a sign that banks are becoming more responsive as the economy improves.
Access to finance has been a prominent concern for UK business owners since the onset of the recession but it seems that the situation is now proving to be less of an issue. The survey found that access to finance now ranks fifth as a key concern for business owners.

However it may be that businesses are being more realistic in their chances of success in getting finance as the report reveals that only 10% of those surveyed said they had applied for funding compared to 17% in 2013. Are they assuming they will get a ‘no’ and so not bothering applying?

But the future is not so bleak when businesses were asked about their plans for the next 12 months. Looking ahead a third said they are planning to raise finance over the coming 12 months with 27% being for business development purposes and 23% to expand their premises.

This move to a more positive reason to raise finance was backed up by a 25% drop in those looking to raise cash to support trading (24% in 2014, down from 32% in 2013); an indication that businesses are moving in the right direction.

The news that businesses are feeling more positive comes on the back of the government announcement that in autumn it will be introducing legislation to force banks to refer businesses which they can’t support to alternative lenders. With small businesses being given more guidance we could see a further increase in the already fairly healthy success rate.

Figures released by the Peer to Peer Finance Association reveal that lending via the peer-to-peer and crowdlending sector has soared in the first six months of this year. During this period the amount lent has doubled with platforms having lent out over £500m in the six months putting it on track to break the £1bn barrier for 2014.

The figure lent comprises of funds advanced to both consumers and businesses but it was growth in money lent to businesses that has led the way.

In the first quarter of 2014 £132m of new money was lent to business and this increased to £146m in the second quarter. The number of businesses borrowing via P2P has also increased from 5,169 in the first quarter to 5,919 as at the end of June.

There has also been an increase in the number of lenders supporting businesses with a movement from 31,616 to 35,477.

The growth demonstrates how businesses are quickly embracing this innovative way of raising finance.

The growth in crowdfunding comes on the back of clear signs that businesses are looking to expand and hence on the hunt for finance. A recent survey from Albion Ventures showed that a third of businesses plan to raise finance in the next 12 months. Of these 27% are targeting capital for business development and 23% looking to expand their premises. With crowdfunding sites such as Funding Circle already entering the commercial mortgage market the peer-to-peer market is well placed to satisfy demand from businesses.

If you want to know how you can use crowdfunding and peer-to-peer lending to support your growth plans read more here or simply complete the contact box at the foot of this page.

In this week’s episode of the Business Finance Bulletin I look at the news that Paypal is launching its Working Capital programme in the UK to provide its clients with access to business loans. So if you’re a PayPal merchant this is for you!

The alternative finance continues to grow with news from AlternativeBusinessFunding that it has brought new alternative lender partners on board.

I also look at a survey from Beggies Traynor on small business investment plans and news from the Competition and Markets Authority about its plans to undertake a full review of the UK SME banking market.

The Business Finance Tip of the Week is taken from a live seminar I delivered for the ACCA on access to finance. In this clip I look at one source of finance which tends to remain hidden in the business… stock.

Thanks for watching and enjoy!

In the latest Business Finance Bulletin Rob Warlow takes a look at findings from the SME Finance Monitor which gives an interesting insight into how small businesses are financing themselves. News from the European Central Bank (ECB) on negative interest rates… so how does that work?

And a look at how alternative lender Shawbrook have moved into profit for the first time which is a sign of a maturing of the alternative finance market.

In the Tip of the Week, a clip taken from a Kevin Green Business and Property Training event, Rob shares one question banks ask of themselves when reviewing a business finance request.

Posted on 30.05.2014, by Rob Warlow

In this week’s episode we look at the first quarter figures of the government’s Funding for Lending Scheme (not all good news I’m afraid). Better figures though come from the British Bankers Association first quarter figures on bank lending, which shows a steady increase in bank lending.

A survey from Close Bros Invoice Finance reveals the different types of finance business owners are using and, in another piece of research, a look at how crowdfunding continues to grow at a rapid rate.

The Business Finance Tip of the Week is a clip from a live seminar Rob Warlow did recently in which he shares his thoughts on what to do if your bank has said no… move on!