Sonovate reports that new research indicates that small businesses are struggling to access finance from mainstream providers – IE traditional banks. Because of this, firms are tapping alternative finance providers as inflation rises along with rates.
Pointing to a report by the UK Financial Conduct Authority that told banks to “improve treatment of struggling small business borrowers,” Sonovate states that lenders are treating small businesses unfairly regarding sustainable payment plans, identifying and supporting vulnerable customers, and ensuring fairness.
Sonovate claims that more than a quarter (26%) of business leaders surveyed have had difficulties accessing finance from main banks with over a third (38%) saying that banks don’t understand their business needs and two in five (41%) think banks’ lending policies haven’t kept pace with modern business needs.
Alternatively, more than a third (37%) of businesses surveyed say that alternative lenders make it easier to access funding, and three-quarters (76%) say that invoice financing tools have greatly benefited their business.
Of course, Sonovate is an alternative finance provider with embedded finance and payment solutions.
Richard Prime, co-founder and co-CEO at Sonovate, says that businesses across the UK are struggling and banks and mainstream lenders have not kept up with the needs of today’s businesses.
“Alternative finance is perfectly positioned to plug this gap, and provide business owners with a lifeline through what is an incredibly challenging period, where funding is likely to be needed more than ever to grow the business. With the rate hike looming, now is the moment for businesses to consider all their options and make a decision that is right for the organisation in the long-term.”