In its report on Small Business Finance Markets for the year ending 2018, the British Business Bank noted that only 1.7% of small and medium-sized businesses had approached a bank for a loan (the lowest number in 8 years).
Even among those businesses that had applied to banks for such a loan, only 43% had any confidence that their application was likely to succeed.
With local banks therefore no longer supporting smaller companies’ demands for finance, what other types of business finance is available?
When companies are starting and have yet to record much in the way of profits, business loans are likely to prove especially hard to acquire and, so, equity finance is likely to be their way forward.
Equity finance is higher risk, longer-term and, of course, demands the investor taking a share in the equity – or ownership – of your company, and, like as not, also a share in the decision-making, explains the Business Finance Guide.
Once your company is on its feet, up and running, and with some commercial success to show for itself, debt finance by way of borrowing may become a realistic option.
By borrowing and repaying the funds according to the agreed terms, you are able to retain full ownership in and the independence of your company – but there are still many different types of business finance available when you borrow:
Secured Business Loans
Peer to Peer Lending
Where banks appear to have all but deserted the market for lending to small and medium-sized businesses and the latter have lost confidence in support from that quarter, alternative forms of business finance have emerged to fill the vacuum.