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SME’s need to diversify their sources for funding

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Tom Thackray head of enterprise policy at the CBI

SME’s need to diversify their sources for funding

Obviously the financial crisis had a massive impact on financial markets for small and medium sized businesses and banks really retreated in the aftermath of the crash.

So we needed something new, providers of finance to step forward. I think the bank situation has improved. There is money available from banks to small and medium sized companies, but because of new regulations on the banks they can’t provide the extent of funding for small and medium sized businesses as they did before the crisis.

So what we’re really thinking about for small businesses now is that they need to diversify the sources of finance that they’re looking for. We’ve seen peer to peer lending has grown by over a thousand per cent in the last couple of years.

Invoice financing has become more popular as well and actually even some small and medium sized businesses are looking beyond debt products and looking towards equity and thinking about how they can finance their growth that way.

So it’s about an appetite to look beyond the kind of products that they’ve used previously and try some new things which might be able to help them take the next step.

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