Posted on 20/02/2015, 14:42
Now we are well into the new year, the question on everyone’ lips is …
“Are Banks lending to SME Businesses?” … “Oh no they’re not!”
Well you’d be wrong … “Oh yes they are!”
If you look at the major Banks across the UK, their desire and ability to lend to the SME Business Sector is as strong as ever:
… committed to lending to businesses and supporting economic growth.
RBS / NatWest
… with £10bn of new lending – proactively contacting business customers outlining how much additional borrowing the bank is willing to lend their business
… growth charter to help SME businesses achieve growth ambitions … growing lending by at least £1bn net
… 52 local SME funds , allocating almost £6bn in new lending to help businesses achieve their growth plans
… initiative to become SMEs’ partner for growth, with expectation to expand SME lending by more than 10%
and some of the Challenger Banks too …
Metro Bank and Handelsbanken – whilst understandably are not looking at ‘cut price’ strategies to win business ‘switchers’ from the main players, are providing more than just physical competition, with alternate customer experiences, lending strategies and extended opening hours.
So, collectively there is a huge desire and ability to lend to the SME Business Sector from right across the Banking sector, but there are mixed messages in evidence …
A number of Banks will acknowledge that whilst there is a desire to lend, a significant proportion of the existing SME Business lending book is being repaid, and not necessarily renewed >>> creating a strong need for New lending propositions. Never as easy a task as continuation or renewal …
Conversely, certain Banks reveal in open forum that … despite a net lending decline across the banking industry as a whole, they will commit to growing SME Business lending year on year.
The Government, understanding that the Banks have the dilemma of balancing the scales of ‘Risk and Reward’, have introduced various schemes, including The Enterprise Finance Guarantee – aimed at improving the availability of working capital and investment funding to viable smaller businesses that would otherwise be declined for lacking adequate security.
Whilst there are many more Funds, Incentives and of course, New Players in the market … Business Angels; Peer to Peer Finance; Crowd Funding … … …
… What of the SME Business Sector itself?
Supply is one thing, but what of Demand?
Data produced by BDRC Continental from their Q2 2014 SME Finance Monitor reveals a very interesting picture of ‘how SME Businesses feel about accessing external finance’
Use of External Finance
0 = 35%
1-9 = 50% Overall
10-49 = 59% = 39%
50-249 = 64%
39% Permanent non-borrowers … vs … 39% use external finance now
Appetite for Finance
78% – non seekers; 5% – would be seekers; 17% – ‘users’
68% – non seekers; 18% – would be seekers; 14% – plans to apply/renew
Economic Climate vs Access to Finance as a major obstacle
17% saw economic climate as a barrier … vs … 17% saw access to finance as a barrier
NB Q1 2013 – economic climate = 32%; access to finance = 27%
SME confidence that their Bank will agree to future lending requests – remains below success rate
All applications – 40% Confidence of success … vs … 66% Current success rate
Renewals – 51% Confidence of success … vs … 96% Current success rate
New money – 29% Confidence of success … vs … 46% Current success rate
So, to the burning question …
How can SME Business Finance for Growth Demand be stimulated?
Funding for Lending – 29%
Business Mentors – 23% only 54% of SMEs aware of any of the initiatives
Business Growth Fund – 16% ‘range’ from employees: 0 = 53% to 50-249 = 63%
Appeals – 13%
A topic for next Newsletter me thinks ?… …
How SME Businesses can benefit from External Support to fuel their 2015 Growth ambitions …
… Finance for Growth …
… Government Grant Funding for Growth …
… Business Coaching for Growth …
Written by Simon Lewis,
Director | Pro-actions
In or last article, “Measuring What’s Important” we discussed key performance indicators or KPIs. There are lagging KPIs such as financial measures that tell you what just happened and leading KPIs that indicate what your financials are likely to look like.Read More
Following on from our previous blog in this series, “The Most Important Thing”, the next step is to translate your goals into action. For this, setting your targets and measuring your performance against them is vital to making them happen.Read More
What do you want to achieve in your business? Every owner manager had their reasons for why they started out on that journey – what are yours? And more importantly, are they still valid, are you on track, or are your hopes and desires being frustrated?Read More