How to access the best range of funding options in challenging times

Financial pressures can be an enormous concern for SMEs at any time, and during these exceptionally challenging times for everyone in the country, with the Covid-19 virus causing dramatic disruptive effects through our communities and economy, this is even more difficult for businesses.

The government has put in place a package of support to help through the crisis, including the job support scheme,  tax relief and deferment and various business loans and grants, including the Coronavirus Business Interruption Loan for which we’re accredited by the British Business Bank for asset finance and invoice finance.

But despite all the help available, it can be confusing and bewildering for business owners to get the right advice on their financing options. This is where finance brokers can play a key role in supporting SMEs

Engaging with a broker could bring you better options

Our research showed that only a third of SMEs have used a broker in the past. Brokers can be a great source of knowledge when it comes to finding the best finance solution for a small business as they have access to tailored products with bespoke rates, rather than just off-the-shelf loans.

Our research also revealed that nearly half (49%) of SME decision makers rely on personal loans to fund to their business, making it the primary source of funding. Indeed, over a third of SMEs (35%) have never pursued a finance product tailor-made for businesses.

These findings are a big concern. Funding a business through personal borrowing and credit is both a risky and expensive route to take. Personal borrowing rates are frequently higher than the cost of borrowing available to good businesses on commercial terms. It can put considerable pressure on SME owners because the personal and the commercial become wrapped up together and the boundaries become blurred.

Over a third of SMEs (35%) said they have been rejected for funding in the past. But going through a broker is likely to give you a higher chance of success because they know the market and which lenders are better suited to you and your business circumstances.

A good broker will also be able to advise on all of the funding options available, beyond a straight business loan. Our research found that SMEs who access funding through a broker are more likely to use a diverse range of options, which include commercial mortgages (54%), start-up loans (52%) and asset finance (49%). Over a quarter of SMEs (28%) who had used a broker stated their business was able to consider multiple finance options when applying for funding. Two thirds (67%) of decision makers surveyed said that they had recommended or would recommend their broker to others.

Unlock opportunities for growth

On average, SMEs using a finance broker have secured over £95,000 in funding towards their business in the last 12 months – generating over £100,000 of business as a result.

Now more than ever, SMEs need advice and guidance to steer them towards the right options that can help their business survive and grow. Personal lines of credit can quickly become exhausted and are a poor substitute for tailored business products.

In these unprecedented times, SMEs should seek all available advice – from brokers and also other advisors such as their accountant, lawyers etc.

At Aldermore, we stand ready to help and have a wide range of funding solutions available to SMEs across commercial mortgages, property development finance, invoice finance and asset-based lending.

Above all, don’t suffer alone. Speak to experts and take advice. A good broker can help you find the way forward and gain the liquidity that you need.

Source: Opinium Research, conducted between 10 and 20 October 2019 with a nationally representative sample of 1,051 senior decision makers in UK SMEs

 

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