Traditional banks may have a range strengths, but are not always cut out to cater for SMEs. The alternative finance sector is beginning to take an increasing share of SME lending through investing in new financial technology and a dedicated focus on responding to business growth and investment plans. However, there is still a lack of awareness, particularly amongst women.
There is a surprising number of female business owners that decide to give up on their investment plans when banks turn them down for finance. Research carried out on SMEs by Just Cash Flow showed that 35 per cent of female business owners simply gave up when their bank initially said “no” without looking at the other options available to them. This was in stark difference with the amount of men – where only 24 per cent stated they had shelved their investment plans when they had been rejected.
When asked why, 69 per cent of female business owners said this was because “they weren’t aware of alternative sources of finance” and 95 per cent couldn’t name one local commercial broker that could advise them on how to secure business finance.
This lack of awareness was also highlighted in a government report on “Women in Enterprise” last year, which showed that female entrepreneurs often find it difficult to know where to go for support when their business needs investment to grow and that when they are directed, it is to government-sponsored options of which they might not always be eligible to apply for.
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Now that we are operating in such a vast world full of finance options, to hear these statistics is concerning. In my job at Just Cashflow, I speak to different business owners every day and it always surprises me how complicated and lengthy their experiences have been with banks just to get an answer. Alternative finance providers are investing heavily in financial technology to change this – allowing businesses to know in just six minutes if they qualify for the type of finance facilities on offer.
Alternative finance offers entrepreneurs what banks struggle to – a quick, seamless and uncomplicated system that is perfect for those on the go, or the many woman business owners trying to juggle family life as well as running their own company. Entrepreneurs, now more than ever, need flexibility and can’t always afford to wait for weeks to get an appointment with their bank and even longer to get an answer.
New lenders in this space are giving businesses rapid access to finance in a matter of days, helping them to invest and develop rather than stunting their growth. It is very important that SME bosses are aware they have alternatives so that they can fulfil their growth ambitions.
Toni Evans is head of engagement at Just Cash Flow.
In the UK we can often feel that getting “help” is seen as a sign of weakness. Although help can come in many forms, sourcing a finance solution for your business can fall within this bracket, despite it being for growth.
Concerned with issues surrounding gender diversity in business? Don’t miss the Real Business First Women programme:
Drawing on years of the First Women movement and the phenomenal network of pioneering women the Awards has created, this programme features The First Women Awards and The First Women Summit – designed to educate, mentor and inspire women in all levels of business.