With nearly 5 million small and medium-sized enterprises in the UK, it’s no surprise that the sector is essential to the UK economy as a whole, boosting sales, driving demand and creating thousands of new jobs every year. However, many small businesses complain that they still can’t access the funding they require in order to grow and stimulate even more job creation. While research shows that business owners are generally optimistic about the future and the SME sector is expected to take on almost half a million more staff during 2014, many complain that bank lending policies are still too restrictive and are stymieing the chance for their businesses to expand even faster.
It’s in this gap between the expectations of business owners and the lending policies of banks and other traditional lenders that alternative funding sources can help. By providing quicker and easier access to business finance, merchant cash advance providers and others are helping thousands of companies to boost their businesses, fuelling job growth in the UK economy.
Banks Still Not Lending Enough
According to figures from the Bank of England, business lending actually fell during the last quarter of 2013 with businesses paying back £4.3 billion more than the total borrowed by the sector in the three months up to December last year. Despite efforts by the Bank of England to boost funding for the SME sector – such as making improvements in the Funding for Lending scheme to provide loans for smaller businesses – it is these small and medium-sized businesses that are being hardest hit by the lack of access to funding.
While larger businesses can turn more easily to debt financing in the bond market to fund business growth, smaller businesses have been more dependent on high street banks and other traditional lenders to provide the business finance they need. However, restrictive lending practices by these institutions – implemented in the wake of the 2008 crash and, critics claim, too slow to be eased – has left many small business owners complaining that they are either refused credit outright or it is offered at unreasonably high rates.
How a Merchant Cash Advance Can Help
With banks still refusing to lend and SMEs starved of business finance to fuel jobs and growth, many are turning to alternative lenders that provide easier access to the capital funds they require. Merchant cash advances are one such popular alternative, providing businesses with upfront cash in return for a small percentage of the business’ future credit card sales. In addition, merchant cash advances can be offered on flexible repayment terms that allow for fluctuations in sales, a potential life-saver for smaller companies that suffer regular cashflow shortages.
Unlike traditional bank loans, merchant cash advances can be approved quickly – typically less than 5 days – and don’t require a lot of paperwork. As a result, more and more business owners are turning to them to fuel business growth and this trend looks likely to continue while restrictions on lending by banks remains high.
By filling a gap in the lending market, alternative lenders such as merchant cash advance providers are responding to the needs of business owners and playing an important role in the UK economy. Thanks to their ability to offer vital business capital, these lenders are supporting SME job growth and fuelling job creation in the small business sector.