The last two quarters of 2013 and the predicted first quarter of 2014 certainly seem to be promising much for businesses within the UK. The recent GDP growth has made welcome news for UK businesses across all industries, and the increasing housing demand goes even further to suggest that the UK is on its way to recovery and back in business.
The financing landscape that could stop growth in its tracks
Whilst the Government continues to encourage and offer finance and growth initiatives to the UK’s business network, bank lending is still a challenge for smaller businesses. While for some sectors bank lending is slowly on the rise, recent data also suggests that much of this lending is polarised to larger businesses within the UK.
A case study of the largest sector in the UK’s economy
In order to appreciate the outlook on
business lending within the UK, we need to look at one of the largest industries - the construction sector - which accounts for a fifth of all small businesses operating in the UK. Despite the sector benefitting from a housing boom (fuelled in no small part by the government’s Help to Buy scheme), the industry is still suffering from severe under-funding.
To put the importance of the construction industry into context, it is worth noting that last year the sector shed a staggering 40,000 jobs due to a 13% contraction of public non-housing work. Whilst the sector has a projected 2.2% annual growth rate over the next five years, this industry needs financing if it is to meet the housing shortage of 1 million homes by 2022 and realise the creation of hundreds of thousands of jobs.
Construction Businesses and Finance
Yet, with all this taken into consideration,
construction businesses only accounted for 7% of bank loans granted in 2013. Worryingly, this was a drop from the 10% figure of 2011 (when the financial crisis was at its peak). This is a bizarre scenario and one that has the potential to cause significant problems in the future should it continue to be the case
With construction companies relying on steady cashflow and resources to pay for materials as well as staff, these figures are extremely concerning. “It’s simple economics and a lot of businesses in the construction sector have had to look for an alternative means to stablise cashflow and maintain financial stability during these tough times.
Alternative finance has been rising in popularity in recent years - from crowdfunding and peer-to-peer lending, to asset-based finance and modern invoice finance. Each with its own merits, one UK business that has evolved the traditional invoice finance products of factoring and discounting to offer a flexible invoice trading solution is helping construction businesses across the country secure their cashflow and obtain much needed working capital for business survival.”
Platform Black has taken a fresh approach to invoice finance. For businesses that are turned off by the restrictive and onerous terms of invoice discounting and factoring, Platform Black offers Invoice Trading - where businesses can offer unpaid invoices to a pool of investors via an online auction platform. Businesses set the maximum cost they are willing to pay, can receive funds within one day of the auction closing, and can trade their invoices as and when they want to – with no contracts and no lock-ins. If you require fast, efficient, fair value Invoice Finance, Platform Black should be your first choice.
So, as you can see there are a number of alternatives to the traditional out there that can change your busness for the better.