Lending – who is best? Banks? Crowdfunding! Or the Government?

 Who will lend you money?



The computer says NO!!!!



With the UK Government planning to launch their own business bankBritish Business Bank – is this right thing for businesses? Businesses are seeking funding for a majority of reasons yet banks seem to say they will lend but deny to help for a variety of reasons which most business advisors, accountants and companies are at a lost to understand why.

So, in the UK, the Government are stepping in to help and deliver this solution – but are they? Who are the people that will be taking the decisions and and what criteria will they be following? Will they be following the same guidelines as the banks who have said they would help to fund businesses?

Either way, whether Banks or the Government, can we really trust these organisations actually know and understand how to lend to businesses? In my opinion the answer is NO! Just look who these people are that will making the decisions. These people will no doubt be from a financial background or industry and no experience of working in a management position or running a business that requires access to funds or had to apply for funds. So are they the right people?

Therefore, surely the way forward is ‘Crowd Funding‘ or ‘Crowd Sourcing‘ then? (Whilst the latter may not always include money, assistance is provided in other ways). When applying for funds in this manner, you are discussing and sharing your requirements with people from a business background, people in business or investors in business. These groups may have been around for several years but are now coming more and more to fore front of helping to fund businesses due to actually understanding the needs and the benefits of helping businesses. If these people are able to help and understand, why haven’t the banks? Is it because we don’t have the right people in place to help and assist? Or is it profit first? Can they make a profit without taking a risk? Can they secure the lending via a charge over assets?

Using comments made previously elsewhere, if you are ill, you would go to a trained Doctor or Surgeon and not someone who has just read books or studied videos on the internet! You need help, so you go to someone trained in what you need help with. Yes, you can say that going to banks to borrow money is going to someone trained in financial matters and has experience of money. But the answer is, no they don’t. These people don’t have the experience of money from a business point of view. Businesses employ accountants and Financial Managers / Directors due to them being trained in the financial requirements of money management within business.

Thus, moving forward, maybe the solution is that a pool of money is available within a region, county, town, city or village for businesses to borrow from. This money is provided by the local community, businesses or individuals for organisations and businesses to apply to. When they have made there application to the local funding group, they then make an appearance and present their case in front of panel of local business people and individuals – a bit like Dragons Den – to apply for the loan.

Does this sound like a pie in the sky idea? Well no it is not. If you visit many communities, they are local groups that are able to help you start in business or apply for emergency money as an individual via hard ship funds and grants. In a lot of cases, these are grants where sometimes the money is more of a gift and doesn’t need to paid back or is paid back without interest ie no profit made on the grant.

So, if this can happen why can’t this happen to help to businesses where interest would be charged and thus the interest would be/could be seen as making a profit, but that “profit” would go back in to the funding pool to help other people. Well this is just an idea but could it work? Yes I believe it can……

So, are you in or “I’m Out”………………………