So much is written lately again about small businesses having no access to fund their business plans. Based on our experience this isn’t really true.
Sensible businesses who have sensible proposals can obtain sensible funding from sensible lenders. Yes, of course it is no longer as simple as it used to be in 2007, and a lot of banks are stress testing a proposal and asking for much more information than they ever did before (and perhaps they are being over cautious). We have, however, found that the core problem is that businesses can sometimes lack the motivation to go out and get finance. We are not saying that business owners are lazy, but rather that they hear and see how difficult it is to get finance, and they are put off applying. In other words, business people and entrepreneurs have become disenfranchised, and that there is a lack of demand rather than just a lack of supply.
So often, the existence of peer to peer lending and crowd funding is quoted as an example that lenders are not doing their job. But if you look at what business is done by these alternative sources of finance then it is only a small drop in the ocean. That is not really the answer.
Well, this time I am coming to the defence of the banks. It is not entirely their fault (although in fairness they do contribute to the problem). If the economic parameters will improve, if there is a better outlook for the future, if there is less regulation – in fact all of these things then businesses may be inclined to be more positive about the future and that will motivate them to organise funds for expansion and development.
What do you think?