Many Limited company contractors are looking for alternative funding provider

A new report has found that many small to medium-sized business owners, such as Limited company contractors, are looking for an alternative funding provider to banks.

In September, research from Bibby Financial Services (BFS) surveyed 1,000 smaller sized business across the UK, and found that a third of SMEs were looking to change their business funding provider this year, citing a lack of flexibility and poor customer service among the top reasons for moving.

Funding provided by asset based finance providers jumped to a record £18.9bn in the second quarter of the year, according to trade body the Asset Based Finance Association.

According to David Posting, BFS Chief Executive, the reason for so many businesses looking for an alternative funding provider to banks, is due to growing awareness of alternative forms of finance following proposed measures, including the Government’s Small Business, Enterprise and Employment Bill, announced as part of the Queen’s Speech in June.

He said, “The Government’s efforts to expand business lending beyond the banks – including mandated referrals to other lenders – have been well publicised, and this has built awareness of the services provided by alternative funders. The launch of the Competition and Markets Authority inquiry into SME lending is a sign that expanding the financial options for businesses is high on the agenda, which will help to sign-post alternative finance even more.”

From July to the end of September this year, BFS boosted funding to UK PLC from £392m to £415m, representing a 5.8% increase in just three months.

David added, “Businesses are starting to become aware of the range of funding options available and many are turning away from traditional sources of finance. Throughout the summer months and into the fourth quarter of the year, funding enquiries have increased significantly, resulting in our best ever month in July, followed by strong performances in August, September and October.”

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