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Are the UK’s ‘permanent non-borrowers’ missing a trick?


There was more good news for SMEs recently with figures published by BDRC in its Finance Monitor Report showing 79 per cent of small businesses turned a profit in the first quarter of 2015. This is further evidence of the vital role played by SMEs in driving the continued recovery of the UK economy.

However, the report also suggests that there’s been an increase in SMEs declaring themselves to be ‘permanent non-borrowers’ (PNBs) - companies that are not seeking additional finance from any source. With 48 per cent of SMEs now in this category, this represents a significant proportion.

Stability is to be welcomed and I would not for one moment suggest that SMEs borrow money beyond their means of repayment, but if they are to capitalise on the recent upturn in the UK economy then simply standing still is a risky option.

Sensible, managed growth should be a priority for UK companies, and indeed we currently have the very best conditions to enable this to occur. But in order to achieve such growth, businesses will require access to a range of funding sources.

There’s evidence to suggest that some SMEs are still finding it difficult to access funding from the traditional avenues in the banking sector. However, small and medium sized businesses should be reassured that banks are not their only option.

At Tungsten we offer the SMEs that work with us the opportunity to access additional funding through our Early Payment solution. This means that we lend businesses money to the value of selected unpaid invoices. There’s no risk involved as it simply gives businesses access to their own money earlier than would otherwise have happened.

The results of a recent Tungsten-commissioned survey revealed that a quarter of UK SMEs are labouring under the threat of insolvency as a result of late invoice payments. Such a picture suggests that releasing funds from these invoices as a means of generating cash flow is not only efficient but increasingly necessary.

Of course this need not be the only option. Last year saw a rise in all areas of alternative finance, with the use of peer to peer lending, equity crowdfunding and invoice financing all rising by over 100 per cent. This suggests that SMEs are warming to these new models of borrowing, and confidence about their accessibility and effectiveness is spreading.

If SMEs are to have the support to be both prudent and ambitious in an improving economy then these alternative methods of finance might require a rebrand: the ‘alternative’ may need to become the mainstream.


About the author

Ben Sepehri

Ben Sepehri, Business Development, Tungsten Finance, engages with the larger suppliers on the Tungsten Network. He was previously at Barclays and RBS and has more than 10 years of invoice finance experience.



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