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Small Businesses to be Offered Alternative Finance

Every year there are thousands of small business owners that are turned down for loans, but a new scheme is looking to offer alternative finance.

It seems the mainstream banks don’t want to lend you money if you’re a small business, freelance professional or contractor.

Recent figures show that over £4 billion worth of loan applications are turned down every year, although it now looks as though there is a solution if you are one of those people who just can’t get a loan for your business.

The new scheme, which is being endorsed by the government, will bring small business owners in contact with alternative financing sources, such as online lenders who specialise in bad credit or peer-to-peer lending companies.

My opinion? I think this is a great idea, and long overdue of course, especially when you consider there are thousands of hard-working freelance and contractor professionals who are no being approved for loans.

The figures show that currently only 3% of small businesses who get turned down for a loan seek out alternative financing, but now, with this new scheme and government backing we should be seeing more of the self employed getting the loans they need.

I’ve always said that I think many of the mainstream banks are way out of touch with reality, and some of the criteria they want small business owners to meet in order to get a loan is simply ridiculous. Hopefully, this new scheme will give people the alternative they need to start going away from banks and towards online options that are more with the times.

Even the Chancellor, Philip Hammond agrees with me, as he recently commented, “A refusal from a bank should not be the end of the road for a small business, and thanks to the finance platforms being launched today, now it won’t be.”

This all comes at a time when some of the more well known banks have been getting a lot of criticism for the way they treat small business owners. Well, maybe the tables are about to be turned? Let’s hope so.

One thing to note is that while many small businesses, freelancers and contractors should find it easier to get a loan, that doesn’t mean anyone can get one.

Let’s not go back to the days where being financed was so easy even a new business with no track record could get thousands of pounds overnight, and then a few months later go bankrupt.

Sensible lending is always the way forward, and small businesses should still have to check boxes if they want to be approved, including having a proven track record of sales and profit, as well as a solid business plan.

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