Cadbury’s classic marketing campaign has endured for over 20 years, asking consumers – “How do you eat yours?” – to promote their Creme Eggs at Easter. Whether in small measured bites, scooping out the centre with a spoon, blending it into a milkshake or baking it into a cake, this light-hearted snapshot of everyday idiosyncrasies has continued to capture imaginations.
In a recent survey we conducted, 39% of UK SMEs said they were planning to look for finance in 2018. This rose to 61% for London-based businesses, and 59% for those in the Construction sector more generally. Perhaps more worryingly, over two thirds of that 39% said that if they are unable to find the finance they need, this would have a detrimental impact on their business.
When asked where they would look for this finance, 60% said they would trust their traditional bank the most.
Despite this, we know that loan rejection remains a major concern for small businesses when applying for finance with the main British lenders. The Bank Referral Scheme was designed to funnel these cases through alternative finance platforms. Although some progress has been made, this has been markedly slower than expected. A ‘temperature check‘ of the scheme’s efficacy was taken in August 2017, revealing that just 2.8% of the 8,100 businesses referred through the scheme were ultimately able to draw down finance.
Despite good intentions, it seems the scheme may have replaced one bottleneck with another. One of the biggest flaws with the scheme is that businesses are not referred to an alternative lender until after they are rejected by the banks. This wastes valuable time for businesses and also perpetuates the idea that alternative finance is a ‘backstop’ or last resort for those rejected by traditional sources, rather than encouraging business leaders to consider alternative routes alongside familiar options. Not only that, but it doesn’t necessarily help to raise awareness of alternative finance providers, which remains a barrier for small businesses seeking access to finance.
We also asked businesses what they prioritised when looking for finance.
It paints a worrying picture that ‘clear business understanding’ and ‘access to professional advice’ feature relatively low down the list here. We need to help businesses re-write their understanding of external finance – from emergency measure when in need, to a strategic flow of capital to support their business growth.
Clearly, there are a number of avenues that business owners can explore when it comes to finding the right finance – let’s see what our survey respondents said:
Where do you go to for a trusted source of financial advice?
My bank – 62%
My accountant – 42%
Friend / family member – 31%
My broker – 22%
Online resources – 20%
I don’t have a trusted source for financial advice – 9%
So tell us, How do you find Yours?