London and Cardiff, UK, 12th September 2022: New research exposes the difficulties businesses face accessing finance from mainstream lenders and how alternative solutions can plug the gap.

More than a quarter (26%) of business leaders surveyed have had difficulties accessing finance from main banks, over a third (38%) say that banks don’t understand their business needs and two in five (41%) think banks’ lending policies haven’t kept pace with modern business needs.

The research from embedded finance and payment solutions provider, Sonovate, follows a recent announcement from the Financial Conduct Authority (FCA). The regulator warned banks to improve their treatment of small business owners after a review found ongoing instances of lenders treating small businesses unfairly when it came to areas including a sustainable payment plan, identifying and supporting vulnerable customers, and ensuring fairness. Indeed, a third (35%) of those Sonovate surveyed said that banks provide them with no other service or support beyond lending.

The research also showed that businesses which turn to non-traditional forms of finance instead are seeing tangible benefits. Over a third (37%) of businesses surveyed say that alternative lenders make it easier to access funding, and three-quarters (76%) say that invoice financing tools have greatly benefited their business, with around two-thirds (64%) citing faster transactions and business processes as key advantages.

While there is clearly a role for non-traditional forms of finance to provide improved services to businesses, Sonovate’s research exposes how few businesses make use of these types of services. Only 5% surveyed secured a loan or accessed invoice finance from an alternative lender in the past 12 months.

As the cost-of-living crisis continues to impact businesses across the country, being able to access finance quickly is hugely important. This is even more true when it comes to payroll, particularly for contract worker pay – 27% of businesses surveyed admitted to taking more than 90 days to pay contract staff, which is not a viable operational model. Other research* shows that four in ten (44%) small business leaders expect to accelerate their finance plans in response to the prospect of further rate hikes that the Bank of England is expected to implement in the coming months.

Richard Prime, co-founder and co-CEO at Sonovate, said: “It is evident that business owners across the country are struggling to access finance through traditional means. On the whole, banks and mainstream lenders have not kept up with the needs of today’s businesses, and lack the agility, scalability and speed to provide organisations with critical funding.

“Alternative finance is perfectly positioned to plug this gap, and provide business owners with a lifeline through what is an incredibly challenging period, where funding is likely to be needed more than ever to grow the business. With the rate hike looming, now is the moment for businesses to consider all their options and make a decision that is right for the organisation in the long-term.”

The Sonovate platform delivers flexible funding and a bespoke technology platform to streamline and automate the tasks related to funding and managing contract worker placements and freelancer projects. By embedding Sonovate’s invoice finance solution, cash and resources are freed up, enabling recruiters, consultancies and labour market places to focus on growing their business in the UK and internationally.

Media contacts: 

Kitty Guillaume, Karen Lester or Carmen Dixon, Seven Consultancy – sonovate@seven-consultancy.com

Notes to editors:

The survey was conducted by Opinium, on behalf of Sonovate and surveyed 500 senior decision makers at small and medium sized enterprises (between 1-249 employees). Of which, 264 currently or have used freelance/contract workers in the past.

*Research from asset management firm, Close Brothers, published August 2022.

About Sonovate:

Sonovate is a leading provider of embedded finance and payment solutions for the contingent workforce. The company offers finance and technology services to recruitment businesses, consultancies and labour market places that engage contractors and freelancers across the world. Its global technology platform takes the hassle out of managing contractors’ appointments, assignments and payments. It enables companies to get back to growing their businesses, confident that funds are in place to help meet payment deadlines.

Since it began funding organisations in 2014, Sonovate has lent over £2.75 billion to more than 3,300 businesses in 40 countries to ensure over 30,000 people are paid in full and on time for the services they provide.

www.sonovate.com