Are high street bank business loans a thing of the past?

It’s been 9 years since the global economic crisis brought the banking sector to its knees and in that time “alternative” business finance has become altogether more mainstream.

According to those driving the shift, it means SMEs now have access to new, more flexible sources of capital, with the whole economy is benefiting.

“Traditionally, if a business required financial assistance to progress their business plan they would have automatically gone to a high street bank,” said Conor Devine, of Clearpath Finance, a recent addition to the funding world.

“But what happened in 2008 brought that banking structure to its knees and for the last 10 years, the high street banks have been on life support machines, trying to repair their own balance sheets. Their ability to lend money to businesses is restricted, which has ultimately created a major liquidity crisis right across the UK and Ireland.

Over the last few years, a number of alternative sources of finance have come to the market place to fill the gap left by high street banks. These include peer-to-peer lenders, challenger banks, bridging finance companies, mezzanine funders, and other larger private equity lenders.

“Addressing the liquidity crisis is good for the whole economy. If business can’t get access to capital, they cannot invest in new technology, human capital, and ultimately they won’t reach their potential,” said Conor.

Clearpath Finance has convinced a number of lenders in the UK to come to Northern Ireland as it would be a good place to invest their funds.

“We have been delighted with the reaction and impact our business has made on the local economy in such a short space of time. We started out with one alternative lender in September 2016, and today we now have more than 20 lenders committed to the platform.

“It means we can help businesses find funding partners at the best possible rates. In twelve months we have facilitated more than £24m of new investment loans.”

The company’s £30m Green Energy Fund, which launched in May 2017, is designed to help the country’s farmers invest in wind farm and anaerobic digester projects. It is a perfect example of how new funding models are invigorating Northern Ireland’s economy, Conor said.

“We have £10M of this money placed and a further £20M of funds still looking for a home. We are speaking with farmers and developers in this regard daily to endeavour to make a lot of these green projects happen.”

Conor and his fellow director, James Gibbons, said alternative funding didn’t mean the end of the road of traditional banking, rather gave businesses another option, and has brought some much needed competition to the marketplace.

James stated: “Many businesses in Northern Ireland were being turned down by the main street banks over the last number of years when asking for support for their business for one reason or another.

"Whether it’s property loans required, the hospitality sector or renewable energy projects, Clearpath Finance, depending upon each individual case, can offer up to 70 per cent of the ‘loan to’ value, ensuring that SMEs have the access to funds when they need it, whether it is for additional cash flow, to fund an extension, or to grow their business."

For more information on Clearpath Finance, go to http://www.clearpathfinance.com or call 0333 0042 888