Stephen Hodges Advises SMEs Not To Take Out Overdrafts

Stephen Hodges, Chief Executive of the merchant bank Close Brothers stated that “SMEs are far too reliant on overdrafts and would be better off avoiding them altogether. They should be using assets of the business to access alternative sources of finance instead.” Close Brothers lend £5 billion to around 27,000 small businesses in the UK.

Hodges said “it is vital that business owners seriously think about other methods of finance, such as business angels, peer-to-peer lenders, or putting their balance sheet to work through invoice finance and asset based lending. It is absolutely essential that SMEs are aware of alternative sources of finance. They need to make sure that they are well informed and up to speed. There are new sources of finance all the time.” He also added “SMEs need to unlock the value that is in their balance sheets. Plant and machinery, property, stock, accounts receivables – even future cash flows – can be put up as security for a loan.”

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