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CBI: Firms must focus on alternative business lending

Date Added: 22/05/2013  

The Confederation of British Industry (CBI) has called for the country's small to medium-sized enterprises (SMEs) to look into alternative methods of business funding.

With business lending dropping in the UK despite a wide range of initiatives from the government, the CBI says companies need to be looking at options such as peer-to-peer lending if they are to grow and boost the country's economy as a result.

Launching a new alternative finance guide - Ripe for the picking - the CBI released research showing that high-growth medium-sized businesses could be worth up to an additional £20 billion to the economy by 2020.

This comes at the same time as a GE Capital report that shows SMEs plan to spend £51 billion over the next 12 months, but they need the right funding to realise their potential.

Chief policy director at the CBI Katja Hall stated small firms are the backbone of the economy and this is why it is so important they are able to grow and help the UK to move away from the recession as a result.

"Banks will continue to be a vital source of finance but it’s not a one-size-fits-all solution, and we’re encouraging growing firms to open their eyes to the broad range of funding options on the market," she said, adding: "Growing businesses could look to corporate venturing, for example, or to issue retail bonds, like Hotel Chocolat did with its innovative chocolate bonds."

Business minister Vince Cable stated business lending has to improve if the UK's SMEs are going to be able to thrive.

He pointed out that the CBI's new guide is going to help raise awareness of the different types of finance available, as well as how alternative credit channels can introduce more competition to give SMEs choice in the market.

The Liberal Democrat MP recently announced the foundation of a new £300 million business bank, which he claimed shows the coalition government is serious about improving the business lending situation in the UK.

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Posted by Julie Cutts

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