In Focus Commercial Credit Making a Merry Christmas
Can lenders do more to understand the needs and pressures of small businesses and give them what they need?
Anthony Persse EVP financial solutions, Proactis
anthony.persse@
proactis.com
“Christmas is coming, and the goose is getting fat, please put a penny in an SME’s hat.” This is what I have been thinking over the
last few weeks. From speaking to many small businesses,
it is clear that, for many, their businesses fund their lifestyles. This means that, at Christmas, access to cash seems more appropriate than any other time in the year. However, getting it without sleepless nights or unforeseen costs may not be as easy as you would think.
Accessing liquidity Over the years, I have met with, advised and supported thousands of businesses and,
more recently, I have been talking to many specifically about the challenges they face with accessing liquidity. Numerous reports suggest that many
businesses are ‘happy non-borrowers’. This suggests that most businesses do not have any liquidity or cashflow challenges and, as such, do not need to seek finance. Recent dialogue with businesses suggests that, for those businesses that want to grow and to open the doors to new contracts, this is simply untrue. There absolutely is a need for funding,
particularly for smaller and micro-businesses. But there is an inherent fear of finance, a lack of understanding of what is available or, when they do know what is available, a
Numerous reports suggest that many businesses are ‘happy non-borrowers’. This suggests that most businesses do not have any liquidity or cashflow challenges and, as such, do not need to seek finance
perception that it is simply too complicated to service.
Lending styles For many smaller SMEs, funding knowledge is restricted to consumer-style funding types, namely bank loans, overdrafts and credit cards – with many turning to personal debt through these sources to fund their business. Yet many see them not as opportunities
to invest or grow, or to access new channels to market, but simply as a burden, and so they are avoiding them for this reason. Despite there being excellent free sources
of insight of alternative-funding solutions, many SMEs are still not aware of or do not have the time to learn about finance types such as invoice discounting, trade finance, asset finance, and so on. They generally start by seeking support
from their banks and they often request traditional funding types. However, as SMEs with limited registered
information are deemed ‘unknown’ or a higher risk by traditional financiers, this makes them more complicated or costly to service.
December 2018
www.CCRMagazine.com
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