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P2P lending for business, banks, and FDs

Banks tend to assume that financial directors work with them because they want to. In every respect, they should give them a little more credit.

Businesses require commercial finance to keep their cash flow stable and their growth steady – if not rapid. For a long time, bank loans have been the default means of acquiring this finance, and consequently, banks take the custom of small businesses for granted.
But bank services are becoming increasingly unappealing, and it’s not hard to see why: their services grow ever more rigid, their criteria grow ever more stringent, and their offering remains largely divorced from the day-to-day realities of British SMEs.  The number of loans on offer has declined by 9%, and even that’s been significantly outpaced by a 23% decline in small business overdrafts. They reject applications out of hand based on trivialities; they leave companies with a clear roadmap to success and profitability feeling like their potential is destined to go unfulfilled.

Established financial institutions are lending at lower rates than ever, with worse terms than ever, and FDs are increasingly looking elsewhere. Where a standard bank loan or overdraft might be unappealing, alternative finance provides a clear way forward: I2P and P2P lending for business grows stronger and stronger with each passing year.

And yet, in an age where most FDs are planning to borrow more money for their businesses, most of them still don’t know about these alternative finance options – let alone how to find a suitable provider. The overwhelming majority request advice from existing suppliers when they do seek additional finance out. Existing suppliers are not, suffice to say, the most objective
sources of advice. There are more ways to stabilise their cash flow and stimulate further growth than they might think.  
In the absence of proper education and proper resources, however, finance directors can’t really be blamed for their lack of knowledge. It’s incumbent on alternative finance providers – whether they’re I2P, P2P, or some combination thereof (as all P2P providers really are) – to raise awareness of their offering in this crucial target audience. Common misconceptions abound and far too little is done to combat them: too many think that I2P and P2P lending for business is for SMEs, or businesses that operate in different verticals.
The truth is that alternative finance is a spectrum, not a divide: it does not exist solely to service large companies, or small companies, or companies in particular markets. Businesses need to understand that it’s flexible, it’s versatile, and it’s able to address a range of needs and requirements.
Over the past three years, we’ve lent over £400m to British businesses. What’s been most striking for us is how many of them simply don’t know which options are available to them.
With this in mind, we began work on our new P2P finance eBook, which delves into the way finance directors perceive P2P lending for business and alternative sources of funding. Based on a survey of 30 FDs, it explores their beliefs, their concerns, their most urgent funding requirements, and their increasingly fractured relationships with banks. More than anything, it highlights a real gulf about how FDs perceive alternative finance and the reality – and between the service they expect to receive from banks and the reality.

Download our eBook here – and if you’d like to talk about alternative finance, whether it be for invoice finance services or construction financeget in touch with one of our specialists today. 

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