Alternatives to High Street Banks

Philip George, Interim CEO, Shawbrook BankPhilip George, the interim CEO of Shawbrook Bank shares his thoughts on the alternatives to high street banks…

It’s no surprise that so many small businesses have lost faith in the banking sector.  With a constant flow of stories highlighting the failure of banks to lend to or support SMEs, it’s easy to see why.

Research published this week by the Forum of Private Business shows that many cash-starved small businesses are still looking to big banks to provide growth capital and restore confidence – despite having little certainty that they can help.

But it doesn’t have to be this way.

Shawbrook Bank is one of an increasing number of new entrants breathing life into the business lending market. There are many others, too – from specialist banks and building societies to independent lenders and peer-to-peer networks, alternative funding routes are increasing by the month.

Shawbrook Bank and others are helping to ensure that diverse and appropriate funding packages are available to SMEs, from initial or development capital to asset-based finance covering property or machinery. There’s an element of ‘something for everyone’, in contrast to the highly regulated conditions imposed by the big banks.

At Shawbrook, funding to SMEs is one of our principal reasons for being and our commitment to supporting the market has been steadfast since we launched last year. Our no-nonsense, pragmatic approach has struck a chord, and we’re seeing more and more SMEs coming to us for funding.

But for us, it’s not as simple as plugging the high street credit hole with alternative lenders. We believe there’s a wider issue which needs to be resolved – business confidence.

In the last couple of years we’ve seen various government schemes to encourage high street banks to lend more to SMEs, but risk-averse and capital strained banks are still refusing credit to SMEs. Quite understandably SMEs, fearful of rejection, are shying away from applying for loans even when it’s the right time for them to expand and grow.

This week’s research from the Forum of Private Business suggests that SMEs often seek funding first from their relationship bank rather than alternative lenders, and very few use independent brokers to help them find the right loan. At Shawbrook we distribute our lending products through a network of independent brokers, and we believe this channel offers SMEs the best and most efficient way to find the right loan for their business.

Communicating the credibility of alternative funding sources is essential and it’s only through increased awareness of what’s on offer and positive experiences rather than knock backs that SME confidence will grow.

Alternative lending sources offer choice, opportunity and optimism to small businesses. There’s a wealth of funding from alternative lenders that’s just waiting to be accessed – now SMEs need to be given the confidence and awareness to take advantage of them.

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