The Office of Fair Trading (OFT) has unveiled plans to investigate the UK’s small business banking sector for the first time in more than 10 years. The investigation comes at a time when many small businesses are reporting issues with their banks, including the inability to access funding through loans or overdrafts. Some businesses are allegedly struggling to even open standard current accounts Even small businesses that have been able to secure facilities with their banks are reporting increasingly expensive charges and interest rates that are being levied to their accounts, whilst personal possessions such as the business owner’s family home are often requested as security for the facility. The investigation, or ‘market study’, will look into banking for small-to-medium-sized businesses (SMEs) across England, Scotland, Northern Ireland and Wales, and will look to answer the following questions:
- Do small firms have ‘access to services that meet their needs and represent good value’?
- Is a lack of competition between banks reducing lending volumes to small firms?
- Are certain types of businesses, such as start-ups, facing unique difficulties in accessing bank finance?
The news of the investigation follows the results of a survey which revealed that more than half of small firms in certain parts of the UK including the West Midlands and the North West have been rejected by their bank for a loan over the last two years.
What are the alternative funding solutions?
Many small businesses and SMEs are able to access alternative sources of finance, such as invoice finance. Invoice finance, which includes invoice factoring and invoice discounting facilities, works to release cash that gets tied up in unpaid invoices. It is great way of unlocking business cashflow and ensuring your firm gets quick and simple access to the money it has already earned. Why not browse our website for more information on how invoice finance works, drop us an email at firstname.lastname@example.org or give our team of experts a call on 0845 602 9354 for a no-obligation chat.