Financing for SMEs

NEX Exchange is committed to ensuring access to both cost effective and efficient capital from Smaller Companies.

Financing is the bane of the life of any small or medium sized business and since they account for nearly half of the UK economy that's potentially a massive problem. Yet despite stock markets that specialise in smaller businesses are nothing new, many small companies do not look there as a means of raising capital, often thinking they are for “bigger players” and a more expensive source of financing.

The AIM market is arguably the most successful growth market in the world. Since its launch in 1995, over 3,600 companies from across the globe have chosen to join. Whilst established to  help smaller and growing companies raise the capital they need for expansion over the years it has tended to favour larger businesses and now, in excess of 50% of companies on AIM have a market capitalisation of over £25 million.

Smaller companies mostly choose loans when they require new financial resources. A number of businesses, typically focusing on services and growing rapidly, cannot provide the material collateral necessary for an investment loan. Because other forms of raising capital (e.g. venture capital or crowd funding) are not always suitable to cover the entire range of SME types, the stock Market can be the most appropriate form of acquiring long-term financing for some SMEs. It is an important consideration (and at times it is the most important) that the reputation value of stock market presence can also be exploited, which strengthens the visibility of the issuers and their brand value. 

However, SMEs can have a hard time when they have to meet the stringent requirements of regulated markets. The regulation of main markets requires a wide range and considerable depth of information from issuers. The disclosure obligation covers business, financial and practically all other categories of information that may impact shareholder value. It is a time-consuming and expensive process to collect and organise such data, which results in significant preparatory and other costs for basically all companies. 

NEX, or as it has become known, “the other Stock Exchange” is addressing this problem and is committed to ensuring access to both cost effective and efficient capital, while maintaining a high level of governance. It is more than a source of capital – it’s a platform for growth offering investors access to a diverse range of companies and companies far more than capital