Budget 2014 reaction: Alternative finance
Not mentioned in his speech but noted briefly in the report itself – George Osborne is promising “better banking for businesses”
Disappointingly George Osborne didn’t make reference to it in his speech – but another key area for small businesses was the nod in the Budget report to alternative finance.
In a bid to encourage “better banking for businesses” it was revealed that a consultation will be undertaken into helping match start-ups who are turned down for a traditional loan with alternative lenders.
With access to finance such a key issue for businesses, what do business commentators make of the announcement?
Adam Tavener, Chairman, pensionledfunding.com
“Today’s announcement by the Chancellor could pave the way for banks to refer businesses to the alternative funding providers.
“This is also a real opportunity for a collaborative culture to develop between the banking and alternative sectors, not just to refer businesses but to work together on multi source deals that provide exactly the right shape of funding package for the business owner. Better signposting, would give businesses – particularly start-ups – safe access to approved lenders, while helping banks keep UK businesses growing by encouraging innovative or complimentary funding.”
Marc Glazer, CEO, Boost Capital
“Evidence that gross lending to small businesses is 13% higher in 2013 to 2012 must be welcome news for small business owners who are the driving force behind the UK economy.
“The Treasury’s move to develop a route for those businesses to find alternative lending is very encouraging, especially for those (often in sectors without significant assets to leverage) who struggle to meet the stringent lending standards set by high street banks. Alternative lenders who often use different criteria to judge whether to lend to a business offer an important option for UK businesses with strong ambition to grow.”
Doug Richard, founder and CEO, School for Startups
“The Government’s decision to review start-up lending is laudable. Too many businesses struggle to access the funding that, while seemingly modest, has the potential to be life-changing. This has to stop.
“The high street is not always the best place for a business to get the support it needs – particularly a start-up. Alternative funding is often the answer for firms looking to scale or for those new to entrepreneurship, while many others will need to be taught how to use the money so that it’s not wasted.
“What’s important about this Budget is its recognition that alternative funding cannot operate in a silo – and that the banking sector needs to get involved.”
Louise Beaumont, co-founder, Platform Black
“We wholeheartedly support the commitment from the Chancellor to launch a consultation on how best to ensure that the banks refer to alternative funding providers those small businesses that they themselves are unable to fund.”
Peter Savage, MD, Azule Finance
“Despite banks being required to refer rejected loan applications to alternative lenders like us, there’s absolutely nothing in this budget that makes me confident that British banks will boost lending for smaller businesses over the coming year. The top five banks already go out of their way to hold back finance from cash-strapped small businesses that desperately need to get their business or project off the ground. They simply don’t take the time, or interest, in their customers’ businesses to give them the support they need. Something has to change if the UK is to reclaim its position as a hub of innovation.
“While all of these financial investment initiatives are, in theory, great, they’re far too complex for growing businesses. Smaller companies need less red tape, not more of it. They also need to focus their energy on growing their business – not unravelling the complexities of the latest initiative outlined by the Government.”