Halleluiah, small business alternative to Banks David Gustin - March 24, 2014 1:16 AM | Categories: Receivables Finance, Technology & Platforms | New Alternative Liquidity models collaborate A recent story out of the U.K. talked about a collaborative model for enabling banks that reject small business loan applicants to have a fresh chance for alternative non bank funding sources. The site, AlternativeBusinessFunding, is backed by some recent entrants to the scene, including CrowdCube, Funding Circle, Market Invoice, Platform Black, Seedrs, Zopa and Pensionledfunding.com These firms have collectively provided more than £580 million to SMEs to date, one investment bank thinks this is the future: “Liberum, the investment bank, forecasts that alternative funding providers could originate £535bn in financing by 2024, which would represent 50% of the gross volumes in the UK and US consumer and UK SME market." I found the site to be very user friendly. First, they immediately ask how much you need. Second, they include a traffic light, which is their assessment of your chance of getting finance. Third, they route you to the most appropriate funder after answering just a few quick questions about your business. It also enables banks to redirect customers which don’t meet their own lending criteria. It’s pretty cool to see these different business models try and help each other succeed. It tells you that the market for trade credit dwarfs that of trade finance - see Trade Credit versus Trade Finance – Is there a difference? I’m not sure this is just a publicity play for the U.K. Government, as the models above are very different, but at least it does give a small business an opportunity to take the bull by the horns and have another option besides the banks. With some banks firing small business customers these days, it’s good to know there are other options to simplify a business owners' search for finance, at least in the U.K. It would be good to see an initiative like this coming out of the U.S. and Canada, although I suspect this kind of collaboration needs a political push. Related Articles Exploring why Ariba and the ReceivableExchange relationship failed Platform Black’s Louise Beaumont on why the time is Now… First Voice Kevin Ma: 24.03.2014 at 2:04 pm Captive finance institutions like GE Capital and Dell Financial Services that offer distributor financing also have partnerships with alternate non-bank funders, referring their customers that they reject. These funding sources are usually aggregates of investors each taking a smaller piece of the funding amount. It would be interesting to see more institutions like these in US and Canada to provide capital needs to SMEs that cannot get traditional financing to the banks. Reply Discuss this: Cancel reply Your email address will not be published. Required fields are marked *Comment Name * Email * Website Notify me of new posts by email.