The analysis also indicated that in December 2013, net lending to non-financial firms declined by £1.9 billion, with net lending to SMEs down £1.2 billion. In addition to these facts, average interest rates on business loans of up to £1 million spiked.
John Longworth, Director General of the British Chamber of Commerce (BCC) believes the UK’s business finance system is damaged. He said:
“Fast-growing businesses are becoming increasingly disillusioned with the current lending system.”
Many a p2b lending or crowdfunding platform would claim to be the solution to this crisis in SME funding. But now a new alternative finance provider – Agree It – is tackling the problem from rather a different angle. Agree It is a free app that enables Facebook users to lend and borrow between one another. Loans can be requested either for personal use or for use as business funding.
Omar Fansa, the Founder of recent entrant Agree It, explained:
“This is a great way for business owners to raise seed or working capital from friends and family in return for a profit share or interest payment without having to take on new shareholders. Borrowing within social networks could be a lifeline for many businesses and it could be just the thing to help fledgling businesses take flight.”
“Using Agree It to borrow from multiple friends both spreads their risk and ensures a stream of backers rooting for your business to succeed. It’s a chance for everyone to put their assets to better use by investing in good local ideas - an opportunity to become the dragon in the den.”
“By investing in people you know and trust, there’s no middle man taking a cut and the returns are better; everyone benefits.”
Agree It is not a fully fledged platform, more a facility designed to streamline lending between friends. It is an intriguing concept, and a welcome one for small businesses. The more SME financing options out there – the better.
