small business loans

A recent survey discloses small business owners are finding it difficult to use card payment machines as a result of contracts and monthly fees.

Small business owners are being deterred from using card payment devices due to the contracts and monthly fees associated with them, according to a recent poll.

The survey, conducted by card payment app, Tapeeno, revealed that 97 per cent of small company owners found these costs to be their biggest pain points when utilising the majority of card payment devices.

Over 550 small business owners from various industries participated in the poll, highlighting the significant role small businesses continue to play in the UK economy. However, many believed that in order to compete with customers, it was essential to have card payment technology and to spend money on expensive hardware.

According to Jaime Lowe, the Sales Director of UTP Group – the creators of Tapeeno, small business owners face a significant challenge when using traditional card payment technologies as they need to carefully manage their cash flow and often have lower revenue than larger companies. This can be particularly challenging for small businesses, which are already dealing with various issues such as reduced consumer spending due to high energy costs, inflation, and the lingering effects of the Covid-19 pandemic. Therefore, traditional payment technologies can exacerbate the difficulties faced by small businesses.

Lowe stated that Tapeeno has developed software that can convert smartphones into card readers, eliminating the need for additional hardware and avoiding long-term commitments or recurring fees to address this problem.

The Office for National Statistics reports that out of the 1.47 million enterprises in the UK, over 1.18 million are small businesses with one to nine workers. These small businesses, according to data from 2022, were responsible for more than 34 per cent of the total revenue generated in the United Kingdom.

Recent data shows a clear indication of the significant importance small businesses continue to play in the national economy is the fact that 99.9 per cent of businesses in the UK are still SMEs.

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The Sales Director noted that small businesses play a crucial role in the UK economy, but card payment technology has not always been set up to meet their particular needs. With Tapeeno, Lowe emphasised they aimed to change this and provide smaller businesses with a more effective and adaptable card payment option. There are no up-front expenses or charges to be incurred when the system is not in use.

He added that customers may cancel at any time and are only charged for what they use -1.50 per cent- for each transaction.

As the world moves towards a cashless society, the benefits of credit and debit card payments over cash are becoming increasingly apparent. Card payments are not only convenient but also allow customers to make online and in-person purchases without the hassle of withdrawing cash.

This trend is evident in the UK, where the use of debit cards has become the preferred payment method, according to the British Retail Consortium’s 2022 Payments Survey. In 2021, debit card transactions accounted for 67.28 per cent of all retail transactions in the country, with a total value of £282 billion. This represents an 18 per cent increase from the previous year’s figures.

Recent research has highlighted the increasing popularity of cashless payments, particularly among customers with higher incomes and those under the age of 45. According to the Federal Reserve’s 2022 Diary of Consumer Payment Choice, cashless transactions accounted for 57 per cent of all payments in 2021, up from 55 per cent in 2020 and 54 per cent in 2019.

The report indicates that consumers under 45 years old, who made up the majority of this trend, used cash for less than 20 per cent of their transactions.

By Adewunmi Adedayo

Source: IBT

Small and medium-sized enterprises (SMEs) in the UK are facing a growing concern over late payments, according to a report by the UK’s Federation of Small Businesses (FSB). With the cost of living crisis and rising inflation, delayed payments add to the many issues these businesses are experiencing.

As the UK economy continues to face ongoing challenges, small businesses are fighting hard to stay afloat and prove their resilience. To ensure their financial stability, many SMEs are turning to debt collection companies for guidance and support.

Just like the meteoric rise of BNPL schemes in the country, people are developing a habit of delaying payments for the things they purchase and services they use. The study by FSB found that over half of the UK’s small businesses had experienced delayed payments in the previous three months, with construction, education, administration, science, logistics, and IT sectors being the most affected. Frontline Collections, a Debt Collection Agency, has advised London business owners to take immediate action in the event of a late payment or risk never receiving money at all.

Almost a million small businesses are located in London, and if nothing is done to address the problem of delayed payments, according to experts, millions of jobs could be at risk. Expert debt collection companies are aiding in mitigating the problem and recovering millions of pounds in the process.

Tony Meadows, the New Business Manager at Frontline Collections, stressed the importance of swift action, warning that some businesses wait too long to act and ultimately, risk going out of business.

He said: “Whilst we can help most recover what they’re owed, unfortunately for some, they leave it too long to act.”

Meadows noted that UK businesses that interact with the public more frequently are now having problems. He highlighted some sectors, like veterinarians, nurseries, private schools, and dentists, among others, as UK SMEs currently experiencing non-payments.

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Late payments not only affect a company’s cash flow and resources but also have negative impacts on business owners’ mental health, according to a recent poll. The British government has made several efforts, yet many firms still experience payment-related problems on a daily basis.

Moreover, thousands of businesses were forced to close throughout the winter since the energy cost cap did not include them, which has only worsened the issue. The FSB has made several recommendations to the government to address the issue, including urging large companies to commit to maximum payment terms for small business suppliers by 2027.

According to some estimates, the severity of the problem could result in hundreds of thousands of enterprises failing by 2023, putting millions of jobs at risk. There is an increasing need for greater controls in this area, given that 37 per cent of Small and Medium-sized Enterprises seek credit to manage their cash flow, and 62 per cent of the public thinks that business payments should be made within a week.

The UK’s FSB recently published a report titled ‘Time is Money’ that included alarming figures on late payments in the small business sector. Surprisingly, 52 per cent of UK small businesses reported experiencing late payments in the corresponding quarter last year.

To avoid the time-consuming and expensive chore of pursuing unpaid invoices, UK businesses are turning to professional debt collection specialists for assistance. It can be time-consuming to pursue past-due accounts when that time would be better spent concentrating on clients already making payments.

As a result, many UK small businesses seek assistance from reputable UK debt collection companies. UK businesses of all sizes have significantly benefited from the support provided by debt collection companies in the country as they battle late payments and unpaid debts.

By Adewunmi Adedayo

Source: IBT

SMEs are widely perceived to be the backbone of the UK economy, accounting for three-fifths of employment and around half of turnover in the UK private sector. Despite this, while lending to large corporates has steadily risen, growth in lending to SMEs has been stalling since even before the Covid-19 pandemic. Indeed, new findings from Codat cite that almost half of SME owners who are in the market for credit said they find it difficult to access external capital.

With the success of these companies crucial for the wider health of the economy, the Federation of Small Businesses warned last month that further barriers to finance for SMEs will stifle economic growth at a time when it is sorely needed, given many believe the official announcement of a recession is just weeks away.

Put simply, the existing credit landscape is not set up for SMEs to succeed, and there is an ever-widening gap between the financial support they and their larger counterparts are able to secure. Bridging this credit gap is key to addressing how businesses can not only remain resilient in unfavorable economic conditions, but strive for growth and thrive in the long term.

Looking outside of traditional channels

When looking to explore finance options to fund business investments, many SMEs will approach their bank by default. However, while the wider finance industry has evolved considerably, high-street banking remains somewhat antiquated. NatWest, for example, announced in October that it will be closing 43 of its branches across the UK, exemplifying how the traditional role that banks once held – providing customer service, a personal relationship with a bank manager, and reliability – is slowly disappearing.

When it comes to finance options being offered by banks, the routes to obtaining credit remain limited, making it all the more likely that a business will be unsuccessful in its application, or may make funding assessments based on surface-level information, rather than considering the wider business story. This may mean a business owner is either turned away immediately, preventing them from obtaining the financial support they need to grow, or commit to a product that isn’t suitable.

Clearly, an alternative option is needed. With the bespoke guidance that would have traditionally been provided by a bank generally no longer available, the road has been paved for others, such as finance brokers, to step in.

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Considering suitability of debt

Exploring all potential finance avenues will be crucial to solving the issue of the credit gap. All too often, SMEs take out the wrong financial product for their needs; sometimes due to a lack of understanding surrounding their options, and sometimes due to insufficient or poor guidance being offered.

Fewer than one in ten (9%) small firms applied for finance in Q1 2022, according to the quarterly Small Business Index (SBI), plummeting to the lowest level on record. This decline is being exacerbated by a difficult application process for default finance options that are too basic and frequently unsuitable – solely offering fixed-term loans or increased overdrafts, for example.

Nevertheless, appropriate alternative forms of funding can be secured through different channels – specialist finance brokers for SMEs can offer their expertise with regards to products that can directly facilitate productivity and growth.

For example, the relatively new Business Cash Advance has low barriers to entry in terms of eligibility criteria and is an ideal option for sectors and businesses that tend to experience uneven cash flow: they may see seasonal rises and falls in revenue or may struggle with customers paying invoices on time. These cash advances are repaid as a percentage of card sales and therefore are aligned with performance, making them far more flexible and easier to access than many more traditional forms of finance.

Leveraging assets

Accessing the right finance options can often seem like a challenge for SME owners, particularly in a time of economic downturn, and many may not be aware of assets they have that can be leveraged to secure finance. Asset finance is an often underused but effective solution that can present working capital solutions at a lower entry point.

From an external viewpoint, finance brokers can often identify opportunities – anything from medical equipment to agricultural machinery to telephone systems can be considered a valuable asset, and businesses can benefit from the debt being secured against the asset. For example, where businesses own existing assets outright, these can be refinanced to demonstrate a lower risk level to a lender, rather than raising ‘riskier’ new debt. Ultimately, this represents a cheaper form of debt that is more appealing to lenders when appetites for risk are low.

SMEs struggling to meet ever-increasing eligibility criteria required to get their foot in the door with banks means that accessible financing plans have become more important than ever before. Finance brokers with a better understanding of SMEs’ needs have a crucial role to play, going forward, and must step up to ensure that their diverse needs are met.

In challenging times of economic downturn, having access to tailored solutions and bespoke guidance can make a world of difference. Ultimately, successfully navigating our way through business challenges and into sustained productivity and growth will require brokers to take a hands-on, consultative approach to ensure that SMEs continue to grow and thrive on a long-term basis.

By James Cook

Source: Business Leader