Why SMEs Are Looking to Borrow this Year
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Why SMEs Are Looking to Borrow this Year

With the UK economy finally picking up steam again after years of slow growth, unemployment is down and lending up. Meanwhile, monthly figures from the Exaro Insolvency Index show the number of failing UK businesses continuing to decline.

The government is also doing its bit to encourage small business lending through a range of measures. This includes the establishment of a business bank which has lent over £800 million to UK small businesses, as well as capital relief on new SME lending for banks participating in the government’s funding-for-lending scheme.

During the credit crunch years, banks were unwilling to offer out small business finance to businesses that could not post healthy profits over the preceding three years. However, with a rising number of small businesses comfortably back into the black over the last three years, banks are increasingly willing to lend again.

At the same time, the rise of the alternative lending sector has given a much-needed boost to Britain’s small business sector with many options including our very own merchant cash advance, crowdfunding and invoice factoring being great options for small businesses. As a result, small business owners are increasingly confident about borrowing to fuel growth.

Below are the main reasons why borrowing before the end of the year may be a smart move for your small business.

Take advantage of low interest rates while they last

Many analysts expected interest rates to rise before the end of the year, particularly after the Bank of England’s monetary policy committee in August split 7-2 on maintaining the current rate of 0.5%. While BoE chairman Mark Carney has held off raising interest rates for now, it’s clear that this won’t last forever. In order to take advantage of the most attractive lending rates, small business owners should look to borrow sooner rather than later.

Competition among lenders is healthy for small businesses

Small business lending is flowing again, thanks in no small part to the growth of the alternative lending market. Increased competition is good for small business borrowers as they can shop around for the best deal available. With a wide range of financing options – including merchant cash advances, invoice financing, finance leasing and more – small business owners can choose the right kind of finance for their business needs. Low interest rates and increased competition has also led many alternative lenders to cut their own rates and associated fees, helping to lower the cost of capital for business borrowers.

If you don’t expand your business, you may get left behind

With lending up and more and more small enterprises using finance to grow their business, there’s a good chance your competitors are already investing in their future growth plans. If you don’t jump at the chance to borrow when conditions are ripe, you risk falling behind as your business rivals take advantage.

There’s no time like the present so act now if you’re looking to grow your business through finance. Access to capital that can fuel expansion and increase profits could be the best Christmas present you give your employees this year!