Traditional banks and financial institutions are commonly known to cater to large businesses. This means their systems and processes may not be suitable to serve the SME industry.
With the presence of competitive rates and quick loan turnaround times, an increasing number of SMEs are seeking specialised marketplace/alternative financing companies such as Populous World, to unlock working capital quickly using their invoices through its advanced platform. This method of financing for SMEs has seen significant popularity after it was introduced to the market just a few years ago and known for its swiftness and competitive fees.
As the number of SMEs continues to rise, the amount of companies looking to obtain immediate cash increases as well and so does the popularity in alternative financing, such as Invoice Finance.
The alternative financing marketplace for SMEs is on the rise and becoming more mainstream as their platforms continuously improve and their business models expand, just as stated by the Bank of England:
1. Finance is likely to undergo intense change over the coming decade. The shift to digitally-enabled services and firms is already profound and appears to be accelerating.
2. The shift from banks to market-based finance is likely to grow further.
3. Ultra-low rates, new regulations and the need to invest in updating their businesses mean many UK and global banks are struggling to make their cost of capital.
4. Brexit and political and policy changes around the world will also impact the shape of financial services.
5. Risks are likely to shift.
6. Regulators and the private sector have to collaborate in new ways as technology breaks down barriers.
7. Finance is hugely important to the UK and the right infrastructure can support new finance.
The above points published by Bank of England indicate that traditional lenders may not suit the needs of underserved small businesses. Therefore, banks and traditional lenders would need to develop systems to evaluate small businesses by standards specific to their size and resources.
Alternative finance, with its digital and advanced technology platforms, offers a window into what traditional lenders might hope to become.
>> Is your business in need of fast, short-term financing? Do you need to access cash faster than your customers pay you?
Populous World is an Invoice Finance provider that unlocks working capital for UK businesses.
Bridging your business’s cash flow gap is something that Populous World excels in delivering, providing you with the funding tools to grow and sustain your business.