Alternative Business Finance in the UK

While the US Senate continues to dawdle on passing the JOBS Act, and its important provisions to promote crowdfunding, the British government is getting serious about how to create and support new forms of alternative business finance.  The latest salvo can be found in the Breedon Report, a study by an independent commission created to support Britain’s Department for Business Innovation and Skills.

As in the US, bank lending is by far the most widely used source of business finance in the UK.  Similarly, British entrepreneurs face great challenges in working with banks and accessing government lending programs.  Moreover, there is a huge pent-up demand for other financing tools.

The report, Boosting Finance Options for Business, contains a host of detailed recommendations for addressing these challenges.  These include, among others:

  • Creating a single agency to aggregate public small business lending efforts
  • Creating a privately-backed agency to aggregate and securitize small business loans
  • Partnering with private sector associations to create new supply chain financing models
  • Develop tools to facilitate public investment and support of online receivables exchanges, crowdfunding sites, and mezzanine loan funds.

The Breedon Report is expected to serve as a blueprint for the Cameron government’s future work in this area.  Let’s also hope some of these ideas and strategies make their way across the Atlantic,too.

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