Member Article

Finding funding for the aspiration nation

Willi Thompson, business development manager at High Street Boutique Finance, a North East-based lender specialising in the SME and property investor markets, looks at SME access to finance.

SMEs are still struggling, there’s no doubt about it. They might be the engine of the economy, accounting for 99.9 per cent of private sector enterprises and providing 60 per cent of private sector jobs - according to the CBI - but the fuel they need to power ahead has been in short supply.

Since the downturn in the economy, SMEs have found it significantly more difficult to access finance, with banks reducing or withdrawing funding lines. The Federation of Small Businesses’ latest economic report for 2013 showed that fewer businesses expected to grow this year, and fewer applications for finance were accepted in the first quarter of this year, compared to the same period in 2012.

Firms are now being forced to look to other sources of funding to help their businesses develop, such as private individuals, angel investors, crowd funding and factoring.

As a finance provider specialising in the SME sector, High Street Boutique Finance can see at first hand that firms are being left frustrated by traditional lenders. Companies tell us of lost business opportunities because of the length of time it has taken for a bank to approve a loan, or of their overdraft facilities being reduced or withdrawn with little or no notice.

How can a firm survive in these difficult economic times if their overdraft is suddenly reduced or withdrawn - giving the firm little time to pay off the facility and find replacement finance?

And while the Government regularly proclaims that it is getting behind SMEs – who surely must form part of George Osborne’s ‘aspiration nation’ – we haven’t seen much evidence of this having a positive impact on our clients.

Frustration with traditional lenders is one of the reasons why demand for our Cash Tap service – a flexible product which allows businesses to decide which invoices they wish to finance, and when - has grown significantly on a month on month basis since its launch last spring. And we’re now able to help small, consumer facing companies with our Business Cash Loans product too, which offers a short term boost to small businesses such as cafes, restaurants and shops.

So what does the future hold for SME finance? Without being pessimistic, our prediction is that the difficult economic conditions will continue for several more years, and that access to finance for SMEs will continue to be limited.

Many banks are still reluctant to lend and, despite pressure applied by the Government, they are not supporting the SME market place to any great effect.

A massive opportunity therefore exists within the business finance market for companies providing cash flow finance to SMEs. It’s vital that the engine of the economy doesn’t splutter to a halt… and if traditional lenders won’t help, other, more innovative providers will naturally come to the fore.

This was posted in Bdaily's Members' News section by High Street Boutique Finance .