Business Finance News From United Kapital

Small Businesses Still Enduring High Credit Costs

Tuesday 16th of August 2011

Whilst larger businesses are experiencing slightly lower credit costs and availability along with smaller fees, a report today has highlighted the fact that smaller businesses are still struggling with the increasing cost of credit as well as severe lack of availability.

According to the Bank of England there is high demand for credit from small businesses, but the availability just isn't there.

John Walker from the Federation of Small Businesses commented, "Once again the smallest of businesses are losing out. It is very bad news that the volume of lending to small firms fell, despite evidence that there was a marked increase in demand for finance from the smallest of businesses. Until there is more competition in the banking sector, this practice will continue and no amount of lending targets will improve the situation"

Despite the grim situation which has been highlighted here, some alternative lending methods are still available for small businesses that do have high availability as well as high approval rates.

A merchant cash advance is one way of financing your business plans, by providing the company with between £3,500 and £150,000 as an advance on future earnings the business will make. This is paid off in a flexible way (no need for high charges or late repayment fees) via a fixed percentage of credit and debit card transactions which are made by your customers. This process keeps going until the full amount is settled completely. The alternative business loan is ideal for a restaurant or pub requiring finance, as well as a hotel or retail outlet requiring working capital. Approval rates are high and after application the decision is made in just a few days, sometimes a lot sooner.

The benefit of having a cash advance is that the business can establish itself more prominently in the marketplace as well as expanding further and becoming more successful. The finance could be used to expand stock, buy out a partner, open at a new location, build a website or invest in advertising.

According to business analysts, SMEs are the future of the UK's business economy and growth. Without them, the economy could be put in jeopardy. With less availability for traditional business loans, a merchant cash advance is just one way of ensuring small businesses thrive despite the banks' ominous lending situation.