CCR Magazine

Fleximize, the SME alternative lender, welcomes the announcement that leading entrepreneur and businesswomen Michelle Mone OBE will lead an independent review to find a way to encourage more business start-ups and entrepreneurship in disadvantaged communities.

Fleximize believes that one of the key reasons behind why more people from this background do not set up businesses is because they are finding it increasingly difficult to secure funding from banks, and are discouraged from looking at alternatives.

What many of them are not aware of is that there is a growing number of options for raising both debt and equity to turn their ambitions into successful businesses.  For example, over 60% of Fleximize’s business loan customers have been previously rejected by their banks. Its research reveals that between January and March this year, banks rejected credit applications from SMEs, including loan and overdraft facilities, worth an estimated £1.36 billion.  It believes this was around 23% higher than the £1.1 billion of SME credit applications rejected in Q1 2014(1) and 0.7% up on the previous quarter (Q4 2014).

Max Chmyshuk, Founder and Managing Partner at Fleximize, said:  “Banks are battling with a lot of issues at the moment. Aspects of their cost structure and risk management systems are unfavourable  towards the SME lending market  particularly early stage businesses.  In many instances, banks  would rather lend to consumers on the back of their salaries, or to large corporates who have  long performance track records  and strong asset bases.  This makes it harder for talented entrepreneurs from less advantaged backgrounds to break out of the vicious cycle and secure funding for their young businesses.  

“Alternative funders are actively filling the void by building better risk models and looking for early indicators of future success beyond an individual’s credit score.  Fleximize,  for example, developed its own unique credit-scoring model that, alongside traditional credit score, incorporates numerous third-party data that a regular bank would disregard. This gives us a more holistic assessment of a business and ultimately allows us to fund many companies that could not get a bank loan.

“I believe supporting the alternative finance market and educating prospective entrepreneurs on  the alternatives to bank funding should be a priority for any government initiative aimed at helping SMEs.”

(Source - Fleximise Press Release)