Business Planning

The new option to fund SME growth

It’s tough getting access to funds to help you grow your business; around half of all applications from first-time SME borrowers are rejected. The answer lies with the fast-growing alternative finance sector.

20 Jun 2018

Access to finance can be vital as small businesses consider investments for the year ahead. The alternative finance sector offers a range of options for cash-strapped SMEs keen to make those all-important investments in 2017.

The busiest time

Small and medium sized businesses are the foundation on which UK PLC is built. Over five million of these businesses in total contribute nearly half (47%) of all private sector turnover – that’s in the region of £1.8 trillion, according to the Federation of Small Businesses. Despite this, it can be hard for SMEs to get their hands on funding when they need it, and that’s hurting their prospects. The Office of National Statistics reckons only 45% of start-ups survive beyond five years, while insurer RSA claims the figure is nearer 55% of new businesses.

These funds are vital, especially as January can both be a quiet month after the Christmas rush and many SMEs may be considering in investing in new stock, staff or services to fulfil 2017 business plans. Yet it can be a daunting prospect getting access to funding via the traditional routes. The current system doesn’t work for everyone, and many SMEs can find their options limited.

A new way forward

Alternative finance could be the answer for cash-strapped SMEs. It’s a new way of doing things which aims to bring those who want to invest money and those who need it closer together. It’s a technology-led approach to funding which overcomes the traditional challenges associated with lending. And the good news is the UK is at the centre of the European Alternative Finance sector. In fact, it grew 84% in this country last year, facilitating £3.2 billion in investments, loans and donations. Some say that the industry could be worth as much as £12.3bn by 2020.

There are many different types of alternative financing available today, ranging from peer-to-peer lending to crowdfunding and invoice trading. Worldpay has also launched an alternative finance offering, in partnership with Liberis, designed to help our customers access funds for growth more easily.

With Worldpay Business Finance, funds are provided in exchange for a future percentage of the money you take through your card transactions. That means if you’re having a quiet period and not taking much money, you don’t have to worry about making payments you can’t afford. And because it’s not a loan there’s no complicated business case to prove, so no need for collateral, profit and loss, or balance sheets to slow down the application process.

It’s all about getting cash into the hands of the nation’s SMEs and helping businesses grow.