With many banks failing to lend to smaller business, accountants encourage firms to seek new sources of finance

RDP Newmans has said that new research has indicated that banks are disinterested in lending to small businesses and has called on entrepreneurs to seek their money elsewhere.

According to the latest data from Oxford Economics in its Big Business of Small Business” report, small business lending from banks makes up only two per cent of banks’ balance sheets.

RDP Newmans said that this is astonishing considering that small to medium-sized businesses account for more than 60 per cent of UK GDP.

Paresh Radia, Managing Partner at RDP Newmans, said: “We were astonished when we saw the outcome of this report. It clearly shows that lending to the largest businesses since 2015 has increased by around 43 per cent, while during the same period the number of loans made to small businesses has decreased by around three per cent.”

Paresh said that the financial crisis had made banks more cautious about lending to small businesses and that in many cases companies may benefit from seeking finance elsewhere.

“There have been a number of new challengers to the traditional high street banking market when it comes to financing, including Peer-to-Peer lending, equity crowdfunding, trade finance and angel investment to name just a few,” said Paresh.

“Finance is often key when raising money before the acquisition of another business, but it also plays an important role in the funding of new equipment or staff members, which can be essential to a business’ survival and growth.”

Paresh explained that owners and key stakeholders of a businesses needed to consider how much financing they needed, what it was for, how long the period of borrowing will be are and what the tax implications could be before they agreed to a loan or finance.

“Most owners are fairly savvy when it comes to these types of things, but it never hurts to seek out additional advice when making such a commitment to ensure that the investment will do more good than harm,” he added.

To find out more about RDP Newmans corporate finance expertise, please visit www.rdpnewmans.com/our-services/raising-finance