Doing more than filling the finance gap for SMEs

Posted: Tuesday, 2 July 2024 @ 09:54

The challenges of SMEs when it comes to finding reliable funding has been an ongoing topic for the last few years, and it’s no secret that non-banks have stepped in to fill the gap in more ways than one.

However, the topic continues to rumble on, and one of the crucial aspects that perhaps gets overlooked is not that non-banks often offer a funding solution for many small and medium sized businesses, but in some instances it may be a preferable one. 

Delivered by organisations that are businesses themselves, non-bank lenders face and understand the growth challenges and opportunities of entrepreneurialism. They don’t just fill the finance gap for SMEs, but in many cases provide more tailored solutions for cash flow and business development. The challenge for many SMEs however, is knowing which opportunities exist.

Knowing that the door is open

In March, Alternative Credit Investor wrote: 

"Alternative lenders and private debt funds have filled the gap left in the UK small business finance market after banks scaled back their lending, according to the British Business Bank." 

They noted that non-bank lenders had grown their presence by targeting under-served sectors of the market such as specialist equipment asset finance, or by offering a different customer proposition.

In May, Asset Finance Connect wrote that SMEs need the backing of alternative lenders now more than ever. Off the back of a report from The House Of Commons’s Treasury Committee, which claimed that only 5% of UK businesses would look elsewhere after being denied the full amount of finance from their own bank, they said: 

"Many SMEs rely on leased equipment, and the alternative lending market is the door that remains open – but it’s vital that businesses know we are here."

The report also noted that bank loans fell from 80% in 2018 to around 50% in 2023, making it obvious that the gap is not only there but isn’t really going anywhere anytime soon. 

To further illustrate the point, despite SMEs representing over 99% of the business population, large businesses dominate the conventional lending market, receiving 77% of bank loans by value in 2023 according to a 2024 report

Finance opportunities for SMEs 

If we look at this situation from a different perspective however, while the challenges accessing funding have been painful for many, once you know that another option exists, it might turn out to be a blessing. 

We can only truly speak from our own perspective, but in the context of Rivers, we don’t just lend, but lend with care and due diligence. While the numbers always need to add up, our outlook, processes and products are designed with experienced, first-hand knowledge of what it is to run an SME. 

Speak to Ian Mills, our Business Development Manager for Corporate Loans, and you will speak to a person with more than 30 years' experience in business finance, and a deep rooted focus on responsible lending that actually helps clients achieve their goals. Wearing both an underwriting and relationship manager hat, he isn't focused on lending at any cost, but lending that delivers healthy relationships and outcomes.

Equally, our attention to detail, fast turnaround, human underwriting and storybook lending approach, which provides a breadth of product availability to meet the needs of businesses at different stages of their maturity, means our loans are not only responsible but actually help businesses to thrive. 

Non-banks aren’t just specialists in funding, but businesses that are specialists in business finance. We understand the process of lending as well as what businesses need to make the loan work for them. It’s our sole purpose and we are experts at what we do. So while it’s frustrating not to get the business loan you want from a bank, it may turn out that the best option for your organisation is actually a non-bank.

Find out more about Rivers business loans 

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