Hold the front page

Well, it’s been quite a hectic couple of weeks.

After months of frenetic activity we (and our six partner funding companies) successfully launched our game-changing alternative funding web portal, www.alternativebusinessfunding.co.uk.

While it is early days yet, the overwhelmingly positive reactions in the press certainly give us cause for optimism that this site will be a real catalyst for change in this marketplace.

An excellent example of this coverage is this article in This is Money. The piece highlights the 250,000 business loan applications that are turned down by the High Street banks each year. If these rejected applicants can be pointed to our portal by the banks, I believe the businesses concerned stand a much better chance of receiving the support that they need.

More on this to come in the future.

Then last week we received a much appreciated boost to our mission when we won the Business Moneyfacts Best Alternative Funding Provider 2014 award.

In a glittering gathering in London we were presented with this prestigious award. The public acknowledgement of our work provided welcome recognition of the tremendous effort of our staff throughout the business, focused on providing the very best outcomes for our clients.

George Osborne rounded off this busy period with an extraordinary feat. His 2014 Budget contained something of a rarity in this modern age. A real surprise!

I’ll save the detail for a later blog, but suffice it to say that in a single stroke the Chancellor has both destroyed and created tremendous opportunities in the pensions’ industry. How it all shakes out is anyone’s guess at the moment, as I foresee the need for some significant changes before his proposals hit the statute books.

But, one thing is for certain, the twin areas where we operate, commercial funding and pensions, are unlikely to be far from the front pages anytime soon.

Nowhere to go

There can’t be a business owner in the UK who isn’t familiar with the changes that have occurred in the business funding market over the last five or six years.

They may be one of the lucky ones who have not been seriously and negatively affected by the change in the financial climate. They may not have had their facilities reduced or seen their costs increase. They may not have been forced to provide ever greater security for their borrowings or found themselves frozen out of access to any new borrowing.

Indeed, although the last five years have been extremely challenging for many businesses in the UK, there have been those who have continued to grow in spite of these conditions.

The fact is that these are the businesses with options. They might operate in sectors not frowned upon by lenders. Their assets and profits support goodwill from lenders too. The ups and downs of the economy have only limited effect on their access to capital.

But for many, many others the reality has been very different. With the major High Street banks providing their one and only option, even a small change in attitude, a tweak in lender criteria and the results for these businesses can be disastrous.

What is needed is greater knowledge and transparency leading to greater choice for businesses.

I am proposing a radical, new initiative on this front. A form of clearing facility for business lending, somewhere that the business owner can go when the answer from their bank is no. A real alternative.

Watch this space.

UK businesses explore finance options

Business owners have had to deal with a lot of changes since the onset of the current financial meltdown in 2007. Not least being the fundamental way that lenders have had to respond to circumstances by changing, often drastically, their attitude to individual businesses.

I talk to a lot of business owners who are simply confused as to why good, long standing relationships appear to have been replaced by (as the borrower sees it) by a short-term view of the world, often revolving around their last set of accounts.

There is no doubt that we are all going through a re-evaluation of risk. From major High Street players to the quirkiest forms of corporate finance, lenders are looking at their books and planning to reduce their exposure to loss. This impacts businesses in a real way. Access to capital is a critical part of the equation for growth.

Without access to capital businesses will start to alter their own risk outlook. This means not taking on larger jobs, not hiring the extra person etc. There is no way to sugar-coat the fact that starving UK companies of finance will mean an extended period of extremely low (or no) growth.

The Government has recognised this and seems committed to rolling out ever more programmes to try to ease the flow of funds from the centre out. While we have to applaud any initiative that tackles the problem of financing SMEs, I think it is unrealistic to expect these to work in any dramatic way.

Business owners are quickly adjusting to the current climate with a real interest now being shown in financing options that provide long term access to capital while at the same time not requiring levels of security for that lending which, to be frank, a large majority of SMEs are either unwilling or unable to provide.

Hence we have seen an upsurge in interest in Invoice Finance and Pension-Led Funding, both of which leave considerably more control over the funding in the hands of the business owner and, in the case of Pension-Led Funding, can utilise assets in the business that most other lenders will ignore, such as Intellectual Property.

Being agile and quick to respond has always been a strength of business in the UK and we can already see that as the landscape of corporate finance changes rapidly, business owners are adapting to these changes and finding solutions that will allow them to prosper into the future, whatever that looks like.