Entrepreneurs and investors discuss the problem of access to finance for UK small and medium-sized businesses.
- Most small businesses only have one banking and credit relationship, so have little choice when it comes to raising growth or working capital.
- The cost of new customer acquisition (and due diligence) for traditional lenders is so high that it frequently wipes out any profits on small sized loans – meaning banks can often only lend profitably to existing customers.
- The quality and completeness of the management accounts provided by many small firms seeking funding is not sufficient.
- There’s a range of possible solutions to the funding difficulties of small businesses, including peer-to-peer lending services such as Funding Circle and Zopa.
On July 19 2011, Sam Gyimah MP, Nesta and the Daily Telegraph hosted a panel discussion to consider innovative ways to help UK small businesses access the funding they need to grow, in the wake of the credit crunch.
Panellists included entrepreneur and investor William Reeve, Samir Desai, co-founder of peer-to-peer lender Funding Circle, Stian Westlake, Nesta’s Executive Director of Policy and Research, and Malcolm Small, Director of Policy at the Tax incentivised Savings Association – with James Hurley, Editor of the Telegraph Business Club, chairing the discussion.
Here’s what our panellists had to say on why UK small and medium-sized businesses are struggling to access external funding, and what options exist beyond traditional bank lending.