Commenting on the just published results from the Bank of England Credit Survey, Louise Beaumont of GLI Finance, criticized the traditional approach to capital allocation as an economic failure;
“With credit availability remaining unchanged despite increased demand for lending from medium sized business, today’s figures once again highlight the failure of the credit eco-system for SMEs. Nearly 500,000 businesses are either deterred or rejected by the high street banks every year, many of which are high growth and successful, so more must be done to ensure SMEs have the fuel to grow.”
The BOE just published it’s quarterly review of credit availability which polled numbers from November 10 through December 1st of 2014. According to the report;
“Overall corporate credit availability was unchanged in 2014 Q4, although availability was reported to have increased for large corporates. Spreads on corporate lending were again unchanged for small businesses, but tightened significantly for medium-sized companies and large corporates in Q4. Lenders reported that demand for credit from small businesses fell, but demand from medium-sized companies increased significantly, and increased slightly from large corporates. Corporate loan performance improved across all company sizes in Q4.”
The report continued to predict that credit availability for small businesses was expected to decrease in Q1 of 2015. Credit availability for medium and large businesses was to remain unchanged.
Beaumont touted the emergent new forms of finance as vital for economic growth;
“The alternative finance industry, which passed the £1 billion milestone for lending in 2014, may only provide 2.4 per cent of annual business lending, but it is growing exponentially and actively supporting businesses ripe for growth currently being failed by traditional lenders.”
“A better referral system used by the traditional players for SMEs seeking finance is fundamental to addressing this issue and would help ensure alternative and more tailored credit solutions can be offered. Too often SMEs go through the rigmarole of applying for finance through the traditional credit committee approach, but this takes too long and often comes back with the wrong answer, and worse still, often without alternative suggestions. Ensuring SMEs are not led down a dead end when seeking finance is vital if we are to ensure this fundamental constituent – contributing nearly 50% of our economy and 60% of private sector employment – is given the necessary means to grow.”
GLI Finance is a Guernsey domiciled, AIM listed corporation (LSE:GLIF), that has targeted alternative finance as the future of providing capital for SME’s. GLI operates a number of platforms including; Proplend, Crowdshed, Platform Black and others. GLI integrates, peer to peer lending, equity crowdfunding, rewards based crowdfunding and more.