- 25 Apr
Crowdfunding, Small Businesses And Alternative Finance
I have been receiving online adverts from a certain well known crowdfunding platform via social media - they seem straightforward enough, funding for businesses with annual turnover of at least £100K using a proportion of a government investment via their platform. Out of interest I have been watching the comments the general public have posted on their advert and some are quite amazing.
1) Businesses Turning Over £100,000 Per Annum Don't Need Funding - this has been posted time and time again by people on the crowdfunding advert - comments like "if I was turning over £100K pa I wouldn't need any finance". Clearly these people haven't run a small business! Turnover is nothing to do with the need to raise finance. You can raise £100K of invoices tomorrow and you probably won't have any money come in for at least a month - businesses of all sizes can need funding and turnover is no assurance of not needing finance. Funding is also available for all sizes of business - the invoice finance products our panel of funders offer can be used by businesses with turnover of less than £100K as well as above. We deal with some alternative finance companies that specialise in small companies.
2) Why Don't They Help Small Businesses? - again this has been posted repeatedly. Firstly, clearly that is a choice this particular crowdfunder has made - to finance businesses of a certain size. That decision may be driven by an expectation that larger businesses are less likely to default or are more likely to be able to bear the level of charges - either way surely it is their perogative to set their criteria as they see fit? Again, there are alternative funders that deal with helping sub £100K turnover businesses who do see this as their target market but each to their own.
3) What Are They Doing With The Rest Of The Government Money? - all the ad does is to draw attention to the fact that the crowdfunder has been allocated a small proportion of an overall government budget to lend via their platform. The number of comments questioning what they are doing with the rest of the budget seems to indicate how untrusting people have become.
For me watching the comments has been a sad reflection on firstly how many people don't understanding the funding needs of medium sized businesses and secondly how untrusting people can be of what I thought was a good effort to help medium sized businesses that we see every day needing access to alternative finance. Fortunately there were also some positive voices correcting these misunderstandings and restoring faith in the general public!