Businesses need to move away from traditional lending models and embrace alternative finance if they are to thrive outside the EU, says Robert Gordon, CEO of Hitachi Capital
Britain’s vote to leave the European Union has generated countless unprecedented challenges for businesses across the UK and created a sense of uncertainty about the future. Uncertainty restricts lending, which defers investment decisions, which in turn limits growth.
It is for this reason that banks cannot and will not be the only source of finance for Britain’s future. Now is the time to be forward thinking and consider alternative forms of finance for funding growth.
For this to happen, businesses need to be willing to embrace forms of alternative finance, such as asset finance. This type of funding model naturally improves efficiency, creating an in-built mechanism for constantly changing business requirements, and is geared to the pace of change we’ve all come to accept.
Every day more than a million UK businesses and consumers rely on us to provide innovative financial solutions, from personal lending to fleet management. This provides us with a unique insight into what’s driving the need for change in the world of finance and re-shaping the way businesses operate. And fundamentally this revolves around economic uncertainty and the speed of technological developments which will consistently change global buying behaviour.
Britain’s vote to leave the European Union in June will change the way UK businesses trade with the EU and the rest of the world. Trade will not stop but SMEs need to be flexible and adaptable. Access to alternative finance will facilitate this flexibility.
Alternative finance, disruption and sharing
Gone are the days of the need to own all assets. Renting gives you greater flexibility and more choice. The growth of the sharing economy with the likes of Airbnb has redirected people’s focus to leasing and renting rather than owning. SMEs need to adapt this mentality in order to keep up with a fast-paced market.
Disruptive technology is changing consumer behaviour, affecting how businesses operate and target their customers. Businesses failing to adapt to this will fall behind their competitors, as we have already seen with the demise of key high street brands. SMEs need to be flexible and open to new finance and business models.
The fact is that asset finance is currently underutilised by SMEs, despite holding the key to driving more rapid, innovative and creative growth.
There’s no disputing the fact that SMEs are the driving force in our economy and have played a significant role in the UK’s recovery following the credit crisis.
Now we must provide alternative forms of funding that’s right for this sector. This will help drive significant growth in the economy, strengthening the UK’s ability to compete in global markets and ensuring that our economy doesn’t wilt after Brexit.
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