The amount of finance sourced from the alternative finance (AltFin) market by SMEs has doubled in the last two years, however, it still remains lower than that sought from traditional lenders. Women entrepreneurs have traditionally been even less likely to seek alternative finance than their male counterparts.
Access to finance is fundamental for a thriving small business sector and the Federation of Small Businesses (FSB) is stepping up its work to support its members in this area. While FSB successfully campaigned for the establishment of the British Business Bank (BBB), it has now also launched a new FCA regulated FinTech platform. The funding platform gives its small business members simple access to a wide range of alternative finance lenders, matched to their unique business needs.
FSB believes that the low take-up of alternative finance by SMEs to date has been, in part, due to an overly-complicated FinTech landscape, with small businesses not having trusted brands offering access to AltFin. Added to this, most AltFin platforms require the business to fill in different funding applications for each and every lender they wish to approach. A process that can be overly time consuming for people who are running small businesses with already huge day to day demands on their time.
Technology has made funding platforms possible, however, FSB believes that most entrepreneurs value bespoke advice from experienced and knowledgeable advisers when it comes to what will work for their unique business needs. The platform also enables access to regionally focussed lenders because FSB believes that local or specialist knowledge is welcomed by SMEs.
Dave Stallon of FSB explained:
“Despite the use of matching technology, FSB believes the human element is still important in order to have an understanding what the business is all about and what its financial requirements are. The platform is a good example how Automation and AI can be utilised as a tool that increases efficiency, because it allows getting the “right human being” in front of the customer at the right moment. Technology is a great enabler, rather than a substitute for human involvement.”
Developed with partner Finpoint, a pilot of the FSB Funding Platform in three UK regions showed that the average amount of finance a small business applies for from an alternative finance provider is £39,000 – half the amount sought from banks, ‘traditional finance’.
Dave Stallon said: “It will transform the business funding market and is a real step change for small businesses.”
FSB Funding Platform, powered by Finpoint, is regulated by the FCA and offers free access to over 120 lenders with AI technology matching entrepreneurs and businesses wanting funding with the best lenders for their circumstances. The platform also provides access to finance advisors.