This premise is born out by the facts: the average value of traditional forms of funding supplied to businesses fell by 5% over the last year. Net traditional funding to businesses is now down by almost £100 billion since 2009/10, falling 19% from £485 billion to £391 billion. The message is clear for those who choose to listen.

The ‘plus’ side to the apparent lack of appetite from the high street is that it has given greater impetus to the rise of alternative lenders, developing more flexible and more imaginative asset-based finance ‘products’ that are helping SMEs find the finance they need to grow.

Crowd funding and peer-to-peer lending from the likes of Market Invoice and Platform Black are fast becoming de riguer, and specialists like Nucleus Commercial Finance are being more creative still, with a specific product within the cash-starved construction sector developed in conjunction with quantity surveyors who understand the intricacies of building contracts. It means that a business does not have to wait to be paid; the company gets the money as soon as it raises an invoice and all concerns about paying staff and costs are removed. 

The only thing that is now preventing the wider take up of such ‘products’ is a lack of understanding of the asset based finance sector brought about, at least in part, by a lack of sufficient publicity. But whilst the focus of those advocates of alternative lending is around business growth, such growth requires a stable platform on which to build, and that requires an environment where the issue of late payment is properly addressed.

The latest research from Bacs shows that the late payment debt burden shouldered by UK businesses has reached £46.1 billion, of which the vast majority (£39.4 billion) is owed to SMEs. Sixty percent of UK SMEs are now experiencing late payments, with the average SME owed more than £38,000. One in four say that if the amount they are owed grew to more than £50,000 it would be enough to send them into bankruptcy.

Avoiding such an outcome requires a combination of sound credit management and a ready availability of cash. In the last 12 months, alternative lenders have been able to make available some £17.5 billion of funds, and the numbers are growing. The use of asset-based finance today appears to far outstrip its usage at the height of the recession, a claim that is far from anecdotal. Touch Financial, a leading independent commercial finance broker, has seen this first hand and noted a marked increase in the number of applications for asset-based finance over the last three years, and from a diverse range of sectors, from construction and recruitment, through to IT and logistics.

While the increased awareness of the benefits of asset-based finance is an encouraging start, it does not go nearly far enough. The message needs to be broadcast loud and clear: if Business Britain is going to continue its recent signs of economic recovery, SMEs need to look beyond the high street and look at viable alternatives to secure their future growth.