The trend of small businesses turning away from bank lending is not limited to the US- it’s worldwide. According to a recent survey, UK small-to-medium enterprises (SMEs) are at a record low for bank funding, just like their American counterparts. These results most likely come from a combination of the poor European business climate and the assumption that banks will not approve loan requests anyway. Success rates for small businesses trying to secure loans stand at about 42%. Banks in the UK were also rated low in communicating other sources of funding to denied applicants.

This survey helped show that banks are a tough source of financing for SMEs all over the world. Applications are time intensive, credit checks are necessary, and the approval process takes weeks. After approval, which is not likely in the first place, disbursement of funds can take anywhere from 30-90 days. For some small businesses in certain industries, waiting that long for cash is not feasible. Alternative financing, including factoring, is becoming more mainstream and popular as banks continue to turn away SMEs.

For the full article, see Small businesses turn their backs on banks