Top Five Financial Trends UK SMEs Should Take Note of in 2019

Rob Straathof is CEO at Liberis, an award-winning alternative finance provider, offering a better way to fund UK small businesses

With 2018 firmly behind us, the early months of the new year are a time for contemplation and evaluation of the last 365 days; both the good and the bad, the opportunities and the challenges.

Although there were numerous business success stories in 2018, the life of a business is never plain sailing and there will forever be bumps along the way. But it is rising to these challenges that so often makes us stronger!

From our experience, one of the most common hurdles in building and growing a business is ensuring the correct amount of finance is accessed to support said growth.  Our recent research has shown that nearly 30% of UK SMEs require funding simply to stay afloat,[i] yet a large majority find accessing this finance a major challenge. One reason being is there is a reluctance among UK banks to invest in risk and innovation, indicating a demand for alternative financing options.

As we move into 2019 – with access to finance on the minds of countless small UK businesses – we wanted to provide some insight for business owners on the top five financial trends of the new year and how these could impact the funding challenges they face.

1. Fintechs’ Importance in Supporting SME Loan Options

It seems, new financial technology (fintech) platforms are becoming an increasingly popular option for small-businesses in need of a cash boost[ii] – especially in comparison to larger lenders. Using smart, integrated processing, fintech is providing smaller businesses with access to innovative accounting software, financial management, insurance and business evaluation services. It’s worth exploring these platforms and considering how they could offer a new dimension to your funding options. 

2. Rise in Open Banking

Saving time, hassle and risk for small businesses is what Open Banking is all about. Using integrated portals, it provides a safe and secure way for providers access to financial information quickly and efficiently. It can provide small businesses with increased transparency, smoother form-filling, fairer credit decisions and greater growth opportunities. A win-win!

Liberis were the first in the UK to process a small business funding application via Open Banking and have since seen the benefits to small businesses first-hand. Looking to access funding as efficiently as possible in the new year, owners should most certainly consider tapping into providers who use Open Banking technology to help benefit their business.

3. Disruptive Financing Options vs Banks

Accessing finance via traditional banks versus more disruptive financing means will forever be an ongoing debate. Today, there remains an understood resistance from banks to lend to UK small businesses, prompting concern on the wider impact on UK small business survival rates,[iii] with the total amount of bank overdrafts and loans outstanding to small businesses decreasing by nearly £6 billion in the past five years[iv].  Make sure to research as many options as possible to decide which best fits your needs.

4. Alternative Finance Increasing in Demand

The small business funding gap is most certainly an area that needs to be rectified; as limiting access to finance can not only hinder small business growth but can negatively impact wider economic progress as a result too. There is a need for ease of application and smoother processing as the highest priority and many alternative finance options provide just this – and as a result are increasing in appeal. As leaders in the alternative finance space, we are keen to shine a spotlight on this issue to help drive additional support. 

5. Growing Need for Flexi-Finance

It’s always worth mapping out exactly how much finance is required and when. This is sometimes tough to estimate but having the option to dial up and dial down the amount of lending required can be beneficial. Finding flexi-finance options, such as our Funding Line can allow access to a consistent source of funds for as long as it might be needed. It’s a positive way of receiving regular agreed amounts on a continual basis – offering an ongoing line of funding, allowing you to plan and grow in a safer environment; safe in the knowledge there is a cushion to fall back on.

Kickstarting growth can be a challenge for any business and requires a huge amount of self-discipline, drive and, most importantly, a consistent enthusiasm. Team that with great financial understanding and know-how and in theory it should be a winning combination. We hope familiarising yourself with some of these trends will help set you on a strong path for a successful 2019.

[i]Liberis Q2 Research, August 2018

[ii]Raconteur, May 2018

[iii]The Financial Times, March 2018

[iv]UK Finance Q2 2018 research