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Organisations in different industries turning to alternative loans

Feb 28, 2013 Sean Albert

The alternative short term lending sector is beginning to mature in the United Kingdom, and the news couldn't have come at a better time.

Despite a recent Bank of England initiative aimed at boosting business loans, a British Bankers Association report found that U.K. lending declined in December, according to The Wall Street Journal.

"There should be a reassessment of fiscal policy [in the U.K.]," Olivier Blanchard, IMF chief economist, told the news source. "We think the March budget would be a good time to take stock and make changes to the austerity plan. Budget time seems like the right time to do these things, and slower fiscal consolidation in some form may be appropriate."

According to the study, non-financial U.K. retailers made $5.5 billion in repayments in December, an increase from November. Despite marginal sales increases, Judith McKenna, chief operating officer of Wal-Mart Stores, suggested that merchants are "far from out of the woods."

Retailers turning to alternative finances
With short term lending coming to a halt in the U.K., business owners have started turning to alternative lenders - and the results have been mostly positive.

"By using a non-dividend investment program, we will ensure that the investment attracts competitive, private-sector funding and expertise, while transferring risk," said Jane Hutt, finance minister of the Welsh government.

According to a recent report by WalesOnline, the Welsh government is turning toward alternative finances as a means of boosting its economy and securing funds for infrastructure initiatives. Because of higher interest rates from financial institutions, economist Gerald Holtham proposed that public sector organizations invest in alternative methods, which tend to contain lower risks.

In addition, many of these short term lenders use PRBC scoring measures that make securing loans attainable for a wider range of companies.