65% of SME’s rejected for a loan want to try alternatives… would you Reply

Bank loan

A government consultation ended last week into whether legislation should force banks to refer rejected loans to alternative sources of finance.

At present the largest four banks account for over 80% of UK SMEs’ main banking relationships. Many SMEs only approach the largest banks when seeking finance. Although a large number of these applications are rejected – in the case of first time SME borrowers the rejection rate is around 50% – a proportion of these are viable and are rejected simply because they don’t meet the risk profiles of the largest banks. There are often challenger banks and alternative finance providers with different business models that may be willing to lend to these SMEs.

Although the largest banks will sometimes refer these SMEs on, in many cases challenger banks and other providers of finance are unable to offer finance as they are not aware of their existence and the SMEs are not aware of the existence of these alternative sources of finance.

SME’s most trusted advisors are Accountants, according to Accountancy Age a fifth of SME’s are more open with their accountant than their bank manager and half believe that their Accountant is the most valuable source of business advice and just under half turn to their Accountant first for advise.

So why aren’t banks working more closely with accountants? I think its because its hard to work with individual accountants and build multiple relationships, its much easier to work with groups of accountants on a national basis such as www.business-accountant.com

Would you ask your accountant if you were looking for finance?

steve@bicknells.net

 

 

Supply Chain Finance – its like Invoice Finance in Reverse 1

I received my copy of CIMA – Excellence in leadership Issue 1 2012 today and I have been reading all about Supply Chain Finance.

I hadn’t heard of it before, the article explains how businesses like Travis Perkins have been working with Santander to find a way to help their suppliers.

Santander offer to pay the suppliers immediately for a fee and the client (TP) pays on their normal trading terms, this is better for the suppliers than factoring because it improves their working capital position and based on the article the fees are cheaper than factoring.

Its good for the client because they aren’t borrowing money either, but the client needs to have a good credit rating. Here is link for more details:

http://www.santander.co.uk/csgs/StaticBS?blobcol=urldata&blobheader=application%2Fpdf&blobkey=id&blobtable=MungoBlobs&blobwhere=1223417457873&cachecontrol=immediate&ssbinary=true&maxage=3600

Have you used this type of finance? do other banks offer it?

steve@bicknells.net