The importance of understanding

For SMEs suffering from credit decline by algorithm there are still people out there willing to roll up their sleeves and take a proper look.

Two recent studies carried out are interesting in that they highlight on one hand how important SMEs are to the UK economy but on the other how difficult it can still be for them to succeed.

Forecasts show that SMEs across the top 10 UK cities will contribute £217bn to the economy by the year 2020. Such growth would represent 27% of total business contributions and see the number of SMEs in London alone rising to over half a million.

Nurture the roots

Starting and growing a business however requires initial investment and ongoing cashflow and the second study shows that business owners continue to bang their heads against the proverbial brick wall in this respect.

A survey of 1,000 SME owners has revealed that of those who had experienced negative issues when trying to access finance, over one fifth put it down to the lender’s lack of understanding of their specific needs.

Perhaps more worryingly a further quarter stated that their lender had no understanding whatsoever about their particular sector.

Rage against the machine

Whether it is a genuine lack of understanding or it’s just because the algorithms haven’t yet been created to cope with some industry types is of no comfort to SMEs.

Luckily for them there are funders outside of the mainstream who make it their business to understand business and sector specifics and make lending decisions based on firsthand knowledge.

The involvement of a specialist broker is even more beneficial in such cases due to the simple fact that they will already know which funders have an appetite for certain sectors, removing the need to Google the world and then make a succession of telephone calls. A good broker can also provide priceless direction on how to prepare the business for the ensuing negotiations.

Real people, real desire

The upshot of going down this avenue is that a business seeking finance will be visited by a real person who will spend time studying paperwork, asking questions, understanding the answers and putting together a case based on real knowledge of the transaction cycle. Furthermore, if specialist advice is required then it will be added to the equation.

Following all that, if the decision is still no, it won’t be through a lack of understanding of the business or sector and it certainly won’t have been made by an algorithm.

By Steve Leeves