…a world of change
Guest content from Angus Dent, CEO of P2P lending platform ArchOver
Glancing at the news, you’d be forgiven for thinking that Brexit spelled the end of days for British business. Recent research by Citibase, which surveyed over 1,100 SMEs, revealed that small businesses in the UK are suffering from the prospect of leaving the EU, as one in five companies surveyed recorded a fall in revenues since the historic referendum result. This increasingly bleak picture of the post-Brexit UK economy has left the finance industry on edge about what is to come.
Uncertainty putting small business under pressure
At the same time, no sector is suffering more from this than small businesses. Business likes certainty, and Brexit so far has brought only the opposite of this. This shows no signs of stopping soon, with the fourth round of exit negotiations still delivering more questions than answers. Uncertainty is poison for investment, and as a result, nervous banks are increasingly reluctant to lend to British businesses in need of finance to grow. That has a serious knock-on effect – a thriving SME sector is essential for future economic growth and a healthy future for UK business.
As a result, there are two key problems to consider: if banks don’t invest, it will worsen major structural problems in the UK economy, in particular low productivity levels. Moreover, if investment and lending continue to plummet, tomorrow’s entrepreneurs will remain in the shadows, unable to find the credit they need to drive their businesses, and the economy, forward.
Brexit isn’t an inevitable economic disaster
This level of uncertainty, however, isn’t in line with what the real economy is doing. BMW took the decision earlier this year to manufacture the all-electric Mini, slated for production in 2019, at its Oxfordshire plant, displaying a confidence in UK manufacturing that will lead to more jobs and exports. Moreover, despite wider economic concerns, nearly four out of five (78%) entrepreneurs are predicting growth over the next 12 months, demonstrating a confidence in their own business prospects, according to July’s Enterprise Index research by Smith & Williamson. Clearly, the real economy is not in dire straits.
There are, then, plenty of encouraging signs that the UK economy is strong enough to weather the Brexit storm – life will carry on, and people will keep investing. The whole economy doesn’t have to suffer as a result of nervous banks. Brexit is not an inevitable disaster for the UK economy or its businesses. In fact, for alternative finance companies that are bold enough to step up to the plate, it’s a great opportunity in a world of change.
This is the perfect time for peer-to-peer (P2P) lending to take centre stage. If big banks won’t lend to fund growth, businesses will need to turn to other forms of finance to achieve their goals. This is where the P2P sector comes in.
Peer-to-peer can help weather the storm
By lending via a P2P platform, investors can provide British SMEs with the funding they need to grow without sacrificing their own financial security, and boost their return on investment at the same time. As a result, P2P platforms can help the UK economy weather this political storm by providing secure and reliable financing to companies in the SME sector, which in turn helps guarantee a strong future for high-growth UK businesses.
Alternative financing platforms play an important role in ensuring the UK economy avoids the supposed ‘inevitability’ of a post-Brexit economic crash. It can enable British businesses to not only stay afloat in the coming years, but also give them the tools to grow and prosper in spite of any economic instability, driving our economy in the right direction off the back of flourishing home-grown entrepreneurship.
We should be pushing British business forward, not allowing it to be held back by nervous banks unwilling to pay out to bold SMEs. Brexit is an opportunity for change and ambition, not an excuse for stagnation. Investing through peer-to-peer lending not only provides British small businesses with the financial stability to drive their own growth, but peer-to-peer lenders also hold the key to the future economic prosperity of the whole country.
Read more from Angus Dent on the Archover blog
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