How small businesses can take advantage of new sources of finance

Banks have reduced lending to small businesses, but there are alternatives as the finance market continues to evolve.

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At first glance, the data on small-business finance looks worrying. A study by the British Business Bank suggests that lending to small businesses fell in every area of the country other than the southeast last year. That followed the experience of 2022, when lending fell in all regions.

However, all may not be what it seems. The British Business Bank’s analysis is largely based on traditional forms of finance for small businesses: loans and overdrafts, often arranged through the business’s bank account provider. In recent years, we’ve seen a huge expansion in the range of finance on offer to small firms, that are often from new entrants very different from mainstream lenders.

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David Prosser
Business Columnist

David Prosser is a regular MoneyWeek columnist, writing on small business and entrepreneurship, as well as pensions and other forms of tax-efficient savings and investments. David has been a financial journalist for almost 30 years, specialising initially in personal finance, and then in broader business coverage. He has worked for national newspaper groups including The Financial Times, The Guardian and Observer, Express Newspapers and, most recently, The Independent, where he served for more than three years as business editor.