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Group calls for alternative SME financing

An organization has urged the government to establish new alternative financing opportunities for struggling small businesses.

The Forum of Private Business (FPB) wants the government to take necessary steps to decrease small companies’ dependency on lending from banks.

According to Growing Business (GB), FPB believes that alternative financing could help firms from going bust after reports suggested that many were struggling because of banks failure to meet lending targets. It wants counter-cyclical alternatives to be put in place which would provide firms with greater protection against economic cycles than the present banking system. 

Speaking to GB, FPB policy rep Matt Goodman said: “Our research indicates that smaller businesses are too dependent on the banks for finance. “At the same time, the recent crisis in the banking industry has made it clear that access to credit should be less dependent on the economic cycle. Any way of reducing the ‘feast or famine’ view of credit needs to be resolved before the next economic downturn. “We believe the government needs to put credible alternative sources of finance in place which will reduce the monopoly on lending the banking industry has.” 

Goodman claimed that the FPB would continue to press banks to boost SME lending.

He also outlined FPB’s belief that invoice financing, leasing, corporate bonds, venture capital and supply chain credit could be made more available to small business.

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