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Reward Funding is a Business Reporter client

The UK’s small to medium-sized enterprises face a challenge when it comes to funding their next move: traditional banks’ rigid systems are struggling to keep pace with today’s business climate. Whether they’re shutting out strong businesses that fall outside their strict tick-box criteria, casting blanket bans across entire sectors or moving so slowly that opportunities are missed, high street lenders can seem like they’re no longer fit for purpose for SMEs.

Until a couple of decades ago, banks were really the only game in town. However, especially after the 2008 financial crash, it became clear that an alternative was needed. In response, dynamic operators such as Reward Funding pioneered the alternative lending sector, with a willingness to finance businesses that struggled to meet the increasingly stringent lending criteria set by banks.

Now, for the first time, alternative lenders are deploying more funds than traditional banks, according to the British Business Bank.

Speed and clarity

“Bank inertia is a real barrier,” says Steve Noble, Operations Managing Director at Reward Funding. “Trying to get a bank to answer a phone, let alone consider a proposal, and far less give a decision quickly, is a real challenge”.

Many SMEs seek funding in response to a specific opportunity that’s arisen or a problem that needs to be solved. In both situations, speed is often a big factor, whether it’s leveraging a time-sensitive offer or dealing with an unexpected cost.

“You’ve got to grasp that opportunity now,” says Nick Smith, Group Managing Director at Reward Funding. “You can’t wait weeks, months in some instances, to get a decision because unfortunately the opportunity has passed the SME by.”

Working with SMEs mostly through brokers and intermediaries, Reward makes sure that clients know early on whether or not they will receive finance – an antidote to traditional lenders who can take weeks and months to give an answer. From start to finish, the process for Reward may only take 10 days. However, the SME could find out on the first day whether they’re eligible. That way, even if the answer is no, the business still has time to explore other options.

“Our approach is more around trying to provide certainty and clarity at the front of the process,” says Smith. “But also to make a decision, stand by that decision and then deliver it as quickly as possible.”

This clarity comes from Reward taking the time to truly understand the businesses it works with. Where some lenders may shy away from seasonal firms because of their natural peaks and troughs, Reward looks at the fundamentals – how the business operates, how it generates value and where its potential lies. Instead of relying on algorithms or blanket exclusions, Reward takes a deeper, more human view.

Understanding the needs of small businesses

Reward Funding can do what it does because of its similarities with the businesses it serves. It is an SME itself: it has flat management structures and knows how these businesses work and what pressures they face. And, it listens.

“It’s really important that you listen to an owner-manager, an SME entrepreneur, as to what their hopes and dreams may be, and to translate that into a story that’s substantiated with facts that allow us to make a decision to say yes,” says Noble.

The relationship between lender and client that grows out of this listening process is key to the impact of Reward’s lending. Reward personalises the whole process – support is provided at every step by someone who knows the client’s needs, whether it be a business development or onboarding specialist.

“Running an SME can sometimes be quite a lonely place to be,” Noble says. “Our ongoing support, whether it’s counsel, or challenge or restructuring of the original deal that’s been written – they can have those conversations and we’ll support that.”

Strengthening the UK’s economic backbone

SMEs are the backbone of the UK economy – they make up the majority of businesses and their wellbeing is closely tied to the economic health of the UK itself.

Making the landscape for lending more suitable to them can therefore only be a good thing.

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