Progress is being made !
It is clear that the High Street banks are reluctant to lend to SME’s who need funds to expand– the one market sector that can pull this country out of recession.
They stick to well established companies, customers they know. Not surprising really, given the pressures they are under, squeezed by more and more regulatory constraints and higher capital requirements, being forced to sell off branches etc.
And with their jobs on the line these days, what bank managers are going to risk any lending that is not copper bottomed and fully secured?
The Government’s latest attempt to persuade them to offer loans to SME’s via the new Funding for Lending scheme has little chance of succeeding, no more than their earlier well-meaning but ineffective efforts.
Why? – because they expect the banks to endorse and implement it. But all that will happen is some ‘smoke and mirrors’ adjustments by the banks to the interest rates. Their underwriting criteria will not change and the only beneficiaries will be those customers already eligible for bank credit, not the SME growth companies.
So the alternative sources of debt and equity finance are thriving.
An auction process known as crowd funding or P2B (people to business) is used by entrepreneurs such as Funding Circle, Market Invoice, CrowdCube and others coming to market every few months.
We use them to help customers raise cash for working capital, stock finance, and to buy leasehold premises – finance for which is almost unobtainable elsewhere .
If you need help or advice about applying for funding, please call me on 01628 668811.