With the tabloids reporting a rise in employment and increased spending providing a welcomed boost to the economy, it would seem that now is the perfect time for SMEs to get their business off the ground. However the recent “Access to Finance” survey conducted by the European Commission and the European Central Bank has revealed that up to a third of UK SMEs failed to secure the funding they needed in 2013, and 15% of those who took part in the survey consider access to small business finance has become extremely difficult.
Despite the positive spin put on the countries financial situation by the government, it appears that the majority of small businesses actually believe that the financing industry has become more challenging than ever before, with exorbitant interest rates and impossible guarantees required for even the modest loans, and many being requests are simply rejected altogether. The group receiving the highest number of rejections following a finance request was small companies of 10 people or less, whereas companies employing 250 or more workers only had three percent of their loan applications rejected.
SMEs are unable to compete with larger enterprises as they frequently do not have access to sufficient capital to invest in their business, or enough collateral to secure a business loan, and as a result they are seeking out alternative business finance methods.
There are several options available to entrepreneurs who need short term business finance, whether they are looking to get their company off the ground, but cannot rely upon the UK banks to support them. These include crowd funding, guarantors, angel finance and merchant cash advances, with the latter being one of the preferred methods for many SMEs.
Whether companies are looking to invest in new premises or new equipment, expand their team or simply resolve cash flow issues, a merchant cash advance can offer them instant access to up to 75% of their monthly debit and credit card sales income. Instead of committing to a small business loan and being burdened with large monthly repayments courtesy of the record high interest rates on offer, a Merchant Cash Advance allows SMEs to gain control of their business finance.
An agreed manageable advance figure is agreed with both parties, and a small percentage of this amount is paid back from each debit and credit card transaction that the SME processes until the advance is repaid. This removes the unnecessary stress of worrying about missing hefty loan repayments and allows the business owner to focus on the more important tasks at hand of running their business and expanding their enterprise.