What's trending in business?
ART Business Loans
ART Business Loans, a long-standing Chamber member, was a pioneer lender to businesses unable to meet their needs from the banks when it opened its doors on 26th June 1997.
Since then we have helped over 900 local businesses to create or protect in excess of 7,000 jobs with loans totalling over £21m.
As we approach our 20th birthday, it seems like a good time to reflect on what has – or hasn’t – changed in business finance.
20 years ago the major source of finance for all businesses, and probably for the vast majority the first point of call for finance and advice, was the banks.
But even then they were starting to move away from supporting the small business sector with the standard overdraft and loan.
If you had a strong balance sheet, growth prospects, a good track record - and in many cases tangible security - you would be assisted.
This is still true today. The banks remain far and away the largest provider of finance by amount to businesses. However, if you look more closely, it becomes apparent that not all sectors and types of business are equally served.
At the small business end of the market, the banks have decided to move away from the high risk areas - start up and early stage businesses - and also the micro business sector.
For these businesses, the banks are no longer the first port of call. A large number of additional and alternative funding suppliers have entered the market.
The former category includes lenders like ART Business Loans, which concentrate their loan offers after a bank decline.
The latter category includes peer lenders, invoice discounters, crowd funders and specialist asset finance schemes to name only a few.
Many of these, however, only lend after a business has been established for two years minimum and only at higher levels.
Public sector supported schemes have also emerged, including the national start up loan scheme, which is Government funded and locally delivered.
It has become the norm for a business to meet its financial needs from a number of sources in a package of finance.
What has emerged as a major problem for businesses is where to find information and advice in the maze of different sources.
The best starting point has to be the ICAEW and British Business Bank guide, which has been recently updated and is also online at www.thebusinessfinanceguide.co.uk.
This contains explanations of the various sources and contact points for further information.
In addition 38 Growth Hubs have been established in Local Enterprise Partnership areas, which should be a source of local and national advice.
The local Chamber-supported growth hub can be found online at www.gbslepgrowthhub.co.uk.
Another key trend has been the movement away from a personal approach to assessing loan applications towards computerised credit scoring.
This has led to the introduction into our vocabulary of the dreaded phrase (of ‘Little Britain‘ fame) “the computer says no”. At ART I am pleased to say, we maintain the traditional approach.
It is important to us to get to know a business and to do what we can to help it survive and thrive, create and protect local jobs for local people.
ART has increased loan delivery in recent years and I believe that despite the emergence of many new sources the need for our service is higher than ever.
We have established new sources of funds and remain committed to supporting viable businesses that could not get vital finance from elsewhere.
So, are businesses better served when seeking appropriate finance than they were 20 years ago?
The answer must be overall a resounding “yes” - with so many more alternative and additional sources of finance available to support their needs than there were in 1997.
Interestingly, the interest rates for business loans remain about the same.