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06 / 10 / 2016

Brexit – How SMEs can continue to invest following the economic shockwaves

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Just when the banks had started lending again and SMEs appeared able to access money a little more easily, along comes the EU referendum.

Following the vote to leave, the pound plunged to its lowest level since 1985 wiping millions off the value of the major banks. Lloyds and RBS lost a fifth of their value.

Now, as the dust starts to settle, sterling has made some recovery, but Brexit still looms and the banks are still cautious and thus, one again, have reined in lending.

 So, how can SMEs continue to invest and grow through this period of uncertainty?

Well, happily, since the recession a whole raft of new-style lenders have emerged offering a viable alternative to the major high street banks.

These include:

Invoice finance

Many independent lenders will pay you the value of your invoices upfront removing the risk of a cash flow crisis due to late payment, but require far less time consuming paperwork than the banks.

Asset Finance

Businesses can access capital lent against the value of their company assets so if they need a lump sum to invest in their company infrastructure or new equipment etc this is a good route to consider using an independent lender.

Angel investor

With some effective networking, you may be able to convince a wealthy individual to invest in your company in exchange for an equity stake.

Crowdfunding

This involves displaying your business idea or pitch on websites such as Kickstarter in order to try and attract contributions from thousands of people across the globe.

Peer to peer

Like matchmaking for business, these online platforms link companies in need of funding to individuals or other businesses who wish to invest.

With so many options now available SMEs must be careful to do their research and choose a trustworthy and well established lender that suits their needs.

Many of the new fintech start-ups, which appear to offer a fast, cheap solution, are little more than online platforms offering just one type of financing with no staff on hand to help out customers if things go wrong or offer advice on the best lending for them.

While they may provide a quick fix for a business or individual in need of some quick cash, such one dimensional financial solutions are rarely a long-term solution and cannot provide the same level of business support and advice as a more established lending facility.

Well-established independent lenders often still offer fast turnaround of money, great value and flexibility, but unlike some purely online platforms, also offer a breadth of experience and expertise to rival the high street banks.

Many offer a wide range of lending services in house, so can tailor their packages to each individual’s business need.

Such lenders’ staff usually have years of experience in commercial finance and can offer added value in the form of advice on a whole raft of business issues, taking a consultative approach.

Thanks to advancing technology and the rise in mobile, online and cloud-based working meaning the assessment, approvals and administration associated with finance provision are quicker and more efficient than ever before, so larger lenders can keep pace with start-up fintech firms in terms of speed and convenience.

So, don’t be fooled by seemingly cheap, quick, easy online lenders, many of which are little more than websites with no staff on hand to help.

Make sure you choose a reputable and experienced lender than can still offer speed, flexibility and great rates but with knowledgeable and helpful staff to advise you.

The main thing to remember is, if something seems too good to be true, it probably is!

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