Small firms’ borrowing costs have reached their highest level since late 2009, hitting businesses that hope to expand, new data has shown.
The average rate of interest paid on loans under £1 million rose to 3.92% in February, having increased from 3.46% in August 2011 and 3.03% at the end of 2009, Syscap data has shown.
Syscap’s CEO, Philip White, said of the figures, “Lending to small businesses has been a focus for the government – they will be disappointed that despite all their efforts to reduce the cost of loans to small businesses they have actually increased, putting off SMEs from borrowing.”
As loans become more expensive and overdrafts continue to prove inflexible and unreliable, companies are increasingly turning their focus on alternative forms of external funding to assist with growth and expansion plans.
Alternative funding options
As the costs associated with bank funding continue to increase, businesses may wish to seek out other viable alternatives.
Invoice finance is one such solution which works to release the cash locked up in your invoices due to late-paying debtors and credit control issues.
Cash can be released within 24 hours from such invoices, when normally you may be waiting 30, 60 or even 90 days for debtors to make payments.