As Vince Cable’s long-awaited business bank makes its debut, pledging £45bn of funds to be lent to UK SMEs through two providers, he put the gap in funding down to several causes:
– A decline in bank lending
– Businesses outgrowing the support available from friends and family and struggling to win long term debt or equity finance
The second point is interesting because it implies a lack of people with a vested interest in supporting the business.
This is where a crowd of individual lenders can certainly help.
Friends and family will have a natural affiliation with an entrepreneur growing a business, but those outside the immediate circle who can see the value in a strong SME sector and a thriving local community are equally as valuable to the types of businesses Dr Cable feels have been prised out of the market.
Of course, the Government has already supported p2p lenders with funds going through other sites (to a mixed response from their lenders) but for speed and value beyond the transaction, there can be few better places to look than the p2p market.
Loan sizes are increasing all the time (rebuildingsociety.com will now consider applications up to £2m) to help a wider section of the market and the intrinsic innovation in the sector allows for otherwise complex deals to be done if a case can be made.
We applaud the steps taken by the Government to help entrepreneurs kick on and the publicity it creates. A stronger SME finance environment can only help the UK overall and the more that businesses believe they can actually get the finance they need, the better.
