Why the First "No"
...Needn't Be the Final Answer
With the echoes of a catastrophic financial crisis still ringing in our ears, it's not hard to see why the traditional banks are more than a little gun-shy these days when it comes to lending to small businesses.
The vast majority of small and medium-sized enterprises never even look beyond the four largest banks when searching for funding, and about half of them are being turned down flat. Those are pretty weak odds if your business, your dream and your personal assets are at stake - but what makes it all the more painful is the fact that many of these businesses are perfectly viable and a third of them actually give up at the first refusal!
Reasons for rejection vary, but a large part of the problem is that big banks are used to companies with easily defined and valued assets to secure against. They simply don't know what to make of a business that's run, for example, entirely from a laptop and a smartphone.
Enter the challenger banks - and unlike their increasingly timid bigger brothers, some of them don't even have doors to slam in your face!
The appearance of smaller banks with firm backing and a dynamic outlook has real potential for shaking up the whole banking sector. Where small businesses are getting left out in the cold by the Big Five, that crippling first refusal may no longer be the death sentence it once seemed. Challengers range from popular high-street heavyweights like Marks & Spencer and Tesco through to flamboyant adventurer Virgin and charismatic upstart Metro Bank.
They may have a few physical branches, hundreds or none at all - but what they all share is a set of crosshairs aimed squarely at the big banks. They've identified all the ways traditional banks are falling short and are eager to dart in and steal the sleeping giants' treasure - and isn't that what we all want, really?
Challenger banks are just one piece in the alternative funding jigsaw. Come and chat to RIFT Accounting, and we'll show you the whole picture.