I had a founder in my office recently. Four years in, solid revenues, fresh out of a funding conversation that hadn't gone well. By the time he sat down, the verdict was already in.

"Rates are too high. Banks have shut up shop. And there are so many lenders out there now that getting a yes should be easy, but it just isn't."

No mention of preparation. No mention of whether he'd walked into a meeting with a lender who hadn't touched his sector in years. 

The market was the problem. Simple as that.

The trouble with that explanation is that it leaves you nothing to fix. And while he's waiting for the market to sort itself out, other founders - same rates, same banks, same market - are walking out with the funding they need.

Let’s look at these concerns. To me, these are just myths, and the first step to letting them go is knowing where they started.

1/ Rates aren't the problem. The conditions you arrive in are the problem.

2/ Banks are lending more than ever, just not the way they used to.

3/ More access to capital has not improved outcomes. Not even slightly.

When a funding round goes south, interest rates are the easiest scapegoat in the world. And look, I get it. If you’re a UK small business looking for a loan, you’re staring down the barrel of anything from 4% to 15% - and even higher if you're looking at unsecured or short-term cash. That stings. It’s not pocket change.

But blaming the rate misses the entire point of how money works.

Two business owners can walk into the exact same lender on the exact same morning and walk out with wildly different quotes: one gets 8%, one gets 28%. That’s not a broken market. That’s a highly efficient machine doing exactly what it was built to do: pricing your specific risk and your timing.

Yes, UK corporate insolvencies have been stubbornly high (running at nearly 24,000). However, if you actually look at the data behind the wreckage, those businesses folded because their cash flow was a mess, their timing was off or they were leaning on capital structures that stopped making sense years ago.

At FundOnion, I tend to tell people to stop looking at the percentage and start looking at the numerical value. You don't pay your bills in percentages; you pay them in pounds. A 10% rate on £1 million is a massive burden, but a 20% rate on a quick £10,000 injection might be exactly what saves your cash flow this month.

When you say "rates are too high," the more specific question is: compared to what, and for whom?

Expensive credit doesn't guarantee failure. A low rate doesn't guarantee success. The price of capital is just a mirror reflecting the state of the business you built before you asked for it.

Fix the internal conditions, change how you look at the numbers, and the price tag drops.

This is the one I hear shouted the loudest, and frankly, it’s pure fiction.

Let’s look at the actual cash moving through the system: out of £62.1bn in gross lending to smaller businesses recently, a staggering 60% of it came from challenger and specialist banks. 

That is the highest on record. Even the traditional high street banks increased their SME lending by 14% year-on-year, hitting £4.6bn in a single quarter.

The money is absolutely there. The banks are lending like crazy. What has changed is how they choose who gets it.

The old-school bank manager who knew your dad, drank at your local pub and approved a loan based on a firm handshake and "good character"? That era has well and truly passed. It’s not coming back.

Today, lending is entirely driven by cold, hard data and highly specific sector appetites. Take Barclays as a quick example: they deployed over £400m into health and social care SMEs through a dedicated fund. 

Why? Not out of the goodness of their hearts. It's because that sector brings in reliable cash and is backed by a growing audience. It’s a calculated bet.

Every major lender has a version of this playbook. They have a specific avatar of the exact sector, stage and cash profile they are hungry for right now. 

The founders who do their homework figure out which lender is currently hunting for their exact type of business, and they walk out with the cash. Whereas the business owners who treat every bank like a generic utility get rejected, walk away empty-handed, and complain that the banks have shut up shop.

They haven’t. They’re just not lending to you.

This is the trickiest myth of the lot, because it sounds like great news on the surface.

Over the last decade, we’ve seen an absolute explosion in alternative finance. More apps, faster decisions, slicker interfaces and more risk capital floating around than ever before. Loan approval rates have even ticked up past 53%. On paper, getting your hands on money has never been easier.

And yet, company insolvencies recently spiked by 15% in a single year, creeping right back up to historic three-decade highs.

Think about that for a second. More doors are open, more cash is being handed out, but more businesses are collapsing. The math isn’t mathing.

The truth? It’s easier than ever to get a “yes” from a lender. The problem is, nobody is asking if “yes” is the right answer for your business.

Taking on a high-interest loan to patch over a fundamental flaw doesn't fix it. It just gives you a much more expensive version of the same problem… and puts it on a timer.

In other words, more access doesn't fix a broken business. It just accelerates the speed at which it hits the wall.

The UK SME finance market is not broken, not stingy and not starved of options. It is complex, specific, and completely indifferent to businesses that arrive unprepared.

Rates reflect risk. Banks have an appetite - just not for everything. And access without readiness is just a faster route to the wrong outcome.

Need funding for your business but want to get it right? Reply READY, and a member of my team will reach out to you directly to discuss your options.

Till next time,

James