SME lending is growing for the first time in years
We were thrilled to read today today’s great news that lending to small and medium-sized businesses has grown for the first time since the financial crisis.
It’s been a long time since the turmoil of 2007-2008, but finally it looks like banks are getting bolder, and recognising the importance of startups for moving the economy forward. And as well as increase in lending by banks and financial institutions, there was an increase seen in peer-to-peer lending and private equity too – showing that it’s a move towards a larger trend across the board. Nice.
However, there’s still a way to go. The study found that 50% of startups are still turned down for bank financing, and – especially when it comes to private equity – London-based startups are still receiving a sizeable chunk of this funding. The report also highlighted that startups aren’t scaling up like they should be.
We asked our Head of Development, Ian Mason, for his views on these findings.
“The fact that half of all applications for bank finance from start-ups are rejected is not surprising" says Ian "We hear it all the time from entrepreneurs. We think that entrepreneurs require better advice and guidance before applying for funding, not only to improve their chances of acceptance, but to improve their business model in such a way as to better take advantage of the opportunities that the funding brings. So that’s what we offer, along with a mentor, to support the first year post-funding.”
“The UK’s productivity has failed to recover from its pre-recession levels almost 10 years after the beginning of the crisis. The fact that only 3% of UK start-ups become mid-sized companies, compared with 6% in the US is something that requires attention. The funding landscape for start-ups has changed dramatically over the last decade, empowering entrepreneurs like never before, but the support available for entrepreneurs between obtaining seed funding and their first raise is severely lacking, something that Virgin Start Up are hoping to address this year.”
At Virgin StartUp we’re excited to fund even more entrepreneurs than before in 2016 and to keep contributing to this trend. Here’s to 2016 being the year of the startup – let's make it happen!