The Government is promoting alternative finance, but it is the responsibility of providers to reach out to borrowers and educate them on the new finance solutions available says Chirag Shah, CEO, of Nucleus Commercial Finance, in a recent interview with the Telegraph.
While this is the golden age of business having access to different kinds of finance, the lack of awareness is prevalent across the country and in all industry sectors. Much more needs to be done to get businesses beyond bank finance and alternative lenders have a responsibility to get their product message out there. Shah says providers should do more in terms of outreach and self-promotion.
Banks are still turning down a high percentage of funding applications and while they have an obligation to show businesses alternatives when they are turned down, they fail to process the rejected applications in a timely manner. Shah points out that a quick no is just as important as a yes when it comes to funding applications. It is often a basic reason that businesses are refused credit and the banks should have known about it on day one but typically keep the business hanging for three or four months. Waiting this long for any answer puts the business in a more critical position and can cause irreparable damage to their finances.
Business needs are evolving rapidly in the digital age and they need rapid decisions to keep pace with their competitors and opportunities, banks cannot keep up with that. The over-reliance on banks is putting businesses and the wider economy at risk.
Businesses also have a responsibility to work harder to find out what is out there. Shah says “It is the ultimate responsibility of business owners and directors to become educated about alternative finance. They should not just take the easy option of walking into a bank.”