When we take out car insurance do we just opt for the first quote we get? Very unlikely. The same goes for a mortgage, an investment fund or a pension plan. We shop around.
We do this because we realise that it’s important to get the right financial product for our particular needs and that choosing the wrong one can have major negative impacts.
So when I speak to businesses in Manchester it surprises me to learn that many only approach one lender – their bank – when looking for funding. Even more shocking is that, nationally, more than a third reportedly give up altogether if turned down by their bank.
This is because many borrowers are not aware of the increasing choice of non-bank funding options that have recently become available.
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After being rejected, 30 per cent of SME owners instead supported their businesses with personal funds, according to the latest SME Finance Monitor. The same industry research reported that 60 per cent of SMEs were not aware of alternative finance.
It’s certainly true that banks have reined in their SME lending since the financial crisis as they shore up battered balance sheets.
Their reliance on algorithms and cutting back staff with expertise in SME lending has also left many businesses seeking funding that do not fit into a neat category, high and dry.
This has promoted the growth of alternative finance over the past decade, giving SMEs access to lenders with an understanding of their requirements and offering greater flexibility than the major banks.
At ThinCats, we specialise in securing SME loans from £250,000 up to £15m. Using sophisticated business modelling tools that identify SMEs in need of capital and a team of financial professionals, we construct the sort of loan package that is as individual as each business.
So, if you’re running a business and need additional capital to help with your growth, remember there are choices beyond the traditional banks.
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