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Business lending principles 'no longer feasible'

Date Added: 30/12/2011  

Small companies need the business lending situation to be overhauled, as principles that have been in effect in this area for the last two decades are no longer feasible.

This is the view of James Vaccaro, managing director at Investment Banking UK's Triodos Bank, who stated new sources of financing are becoming increasingly popular for firms.

Speaking to GreenWise, he explained the commoditise, aggregate and sell on model does not work at the present time and needs to be upgraded to a fresh system of lending.

"It’s going to be a challenge for management and leadership. It will require a new type of entrepreneurship," Mr Vaccaro told the news provider.

He predicted energy efficiency is set to become more important for small businesses in the UK over the course of the next few years, as it gives them the chance to cut their own spending.

New community schemes, crowd sourcing and peer-to-peer lending were also forecast by the specialist to become bigger trends in 2012 and beyond for the country's smaller firms.

An example given of a community crowd-funded business lending model that could be thrust into the forefront in the coming years was Peoplefund.it, which was launched by celebrity chef Hugh Fearnley-Whittingstall and specifically targets green and social entrepreneurs.

Ecobonds were also predicted by Mr Vaccaro to become more popular among individuals as well as small business, as these allow investors to make money from a wide range of innovative green products that are new to the market.

National chairman of the Federation of Small Businesses John Walker recently stated small companies are finding it hard to access lending from banks at the present time.

He explained a further blow to firms in the UK will occur in 2012 when a planned fuel duty hike by the coalition government comes into effect.

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Posted by Julie Cutts

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