Feb 20, 2013 Sean Albert
Business growth throughout Europe has reached a standstill, with the 17-country European Union reporting a 0.6 percent market decline in the last three months of 2012, according to The Associated Press. Germany, which has typically outpaced much of the continent, was included in that group.
"With increased uncertainty stemming from the euro crisis and the global economic cooling in the second half of the year, the German economy has finally lost its invincibility," Carsten Brzeski, ING senior economist told the news source.
At the same time, the news wasn't all bad, as Brzeski told the news source, "There is increasing evidence that the economy should pick up speed again [later in the year." Meanwhile, in the United Kingdom, a recent initiative could spark business growth, according to The Telegraph.
In a recent column for the news source, James Meekings, founder of Funding Circle, said that in the wake of U.K. lending collapses, more small and medium-sized businesses (SMBs) are turning to alternative short term lending options.
Securing loans from banks can be a long, drawn-out process, and one that has become more difficult because many financial institutions are going through their own set of hardships. As a result, some SMBs have turned to alternative methods like peer-to-peer lending, which instead rely on Payment Reporting Builds Credit scoring methods.
According to Meekings, businesses - and even town councils - are using the internet to secure these loans, making the process significantly faster and easier than traditional measures. He said that through peer-to-peer loans, companies will be able to borrow seemingly any amount of funds they need, which in turn could kick-start the British economy.
Alternative lending means everyone wins
Although Meekings emphasized that alternative short term lenders will never replace financial institutions as the go-to short term lender, he believes they can provide an extremely effective complement. In a column for Forbes, Brock Blake, CEO of Lendio.com, advocated a similar position.
Because alternative lenders mean more competition for banks, interest rates will inevitably decrease as a result. This will ultimately lead to lower capital costs for companies.
Blake highlighted a business owner of a scientific and technological solutions firm that - after struggling to receive additional financing from banks - turned to alternative short term lenders. Many of these firms responded positively, which, as Blake noted, gave the owner the leverage he needed to secure a loan.
Blake anticipates the alternative short term lending sector will be equally strong in 2013. So too does Meekings, predicting that it could account for 10 percent of all small business loans in the near future.