Do larger financial institutions just ‘not get’ smaller businesses?
With RBS accused of deliberately pushing small businesses into financial difficulty, It seems more important now than ever for alternative finance to prove their worth to smaller businesses. Whether RBS allegations are culpable or not, it is often the case that these larger outfits do not meet the immediate needs of small owner managed businesses, and as a result their smaller clients are often overlooked and can find themselves in financial distress.
Generally speaking, larger Financiers have a larger volume and spread of clients, and therefore do not have the time on a one-to-one level to really get to know and understand how a clients business operates. Extensive bureaucracy and stricter lending procedures creates a ‘one size fits all’ or ‘tick box’ culture which is often geared to the processes and systems of larger and longer established businesses.
But where does this leave growing SMEs? Many smaller businesses are owner managed, and have a limited amount of resource. They often do not have the luxury of time nor a dedicated accounts department to produce the in depth information often necessary for approval, such as cash flow projections, exhaustive business plans etc
At the end of the day, smaller businesses have very different needs and challenges to larger ones.
For Small business owners its crucial to be fast on your feet; running a small business can involve ‘firefighting ‘ on a daily basis, therefore an in-depth medium to long term cash flow plan is often deemed redundant. Late payments from customers, unforeseen expenses, seasonality and rising running costs are all factors that can get a business into financial distress; and they need quick access to capital when these scenarios present themselves. larger Financers more often than not can not provide a business finance solution that can work in line with the fluctuating and impulsive nature of small businesses.
Jonathan Cranston, Chairman of Ashley Commercial Finance comments:
“ For 21 years, Ashley have exclusively dedicated their services to businesses ranging from Start ups to companies with around £2.5 million turnover, we come across businesses on a day to day basis who have been disapproved for finance maybe because they did not fit criteria, perhaps due to a CCJ they have picked up or for simply being ‘too small’. Even if they (the financer) are willing to take on a smaller client, their systems can make working with them a complicated and slow process. Ashley deal with any issues as they occur, are as hands on and as transparent as possible, so the client can get the support and capital they need and can get on with running their business”.