Finance has long been a problem for small business. Business loans were long assumed to be the safest and most lucrative method, but this has recently been disproved. With bank scandals surfacing at an alarming rate, it is no wonder that institutions have tightened lending standards. Alternative Finance has filled the gap, with practices such as crowdfunding and peer-to-peer lending gathering significant momentum in recent years.
Alternative finance has awarded businesses with more flexible and modern methods of expansion and business growth. There still remains uncertainty surrounding finance, with many business owners simply unsure how best to elevate their enterprise.
A survey commissioned by the British Business Bank found that many small businesses are still unaware of their finance options. This could suggest a lack of research on the part of the business to find out what’s available, or the failure lies with institutions in not signposting firms to alternative providers.
According to the British Business Bank, only five per cent of businesses polled said they had considered angel investment and just seven per cent had considered crowdfunding. There is an alarmingly large amount of businesses who are unaware of their options, potentially shelving expansion plans on the assumption that funding is unattainable.
This ignorance can be shifted through the use of marketing, spreading the word through social media and website content. Many older businesses remain reluctant to embrace digital intervention, but it is through online processes that business owners can be educated about what is available.
The British Business Bank itself has announced its Finance Hub. This interactive website will provide businesses with information on finance options, helping them scale up and expand their business perimeters. This move from the Bank will help educate SMEs and help them manage their cash a little better.