EstateGuru tips alternative lenders to step up and support SMEs
EstateGuru has tipped alternative lenders to step in and support small- and medium-sized enterprises (SMEs) as businesses face rising costs and uncertainty.
The European peer-to-peer lender, which entered the UK market earlier this year, said that alternative lenders take a more holistic approach to credit assessment and can step in and support SMEs that are turned away from banks.
“It’s little surprise that SMEs have been caught in the whirlwind that’s currently disrupting the UK economy,” said Ross Gandy, UK managing director at EstateGuru.
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“Supply chain issues, rising costs, wage inflation and a challenging labour market have all contributed to an increased demand for working capital. However, when times get tough, traditional banks often shy away from lending to SMEs, since a lot of these small businesses won’t meet their strict one-size-fits-all lending criteria.
“In volatile times like these, alternate financing can support SMEs when they have been turned away from the bank, thanks to innovative options like property-backed lending and other asset-based schemes.”
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Gandy highlighted that alternative lenders take “a much more holistic approach”, evaluating each case on its own merits.
“Following last week’s news that the government may not be able to fulfil its 300,000 houses a year pledge, it’s more important than ever that SME developers have access to the financing they need to thrive,” he added. “These funds will not only make the government’s housebuilding target more attainable, but they will also support small businesses during what is a particularly turbulent economic period.”
Gandy’s comments come in response to first-quarter statistics from industry trade body UK Finance, which revealed that gross lending to SMEs grew by £100m from the fourth quarter to reach £4.9bn in the first three months of the year.
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Stephen Pegge, managing director of commercial finance at UK Finance, said that activity across the economy continued to expand at the start of the year, but SMEs were beginning to face a pick-up in economic headwinds.
He said that while concerns about household finances have been making headlines, many companies are also dealing with sharply rising input costs and more uncertainty about the demand outlook.
