Vince Cable asks small business to explore non bank funding…

  • Anil Kanda
  • 05 Jun, 2013

Vince Cable asks small business to explore non bank funding and the banks cut loans…again. Are the banks completely turning their backs on smaller business?

Despite Vince Cable’s comments that “the government want to see a shift in the market structure towards non-bank lending” the banks still have not woke up to the importance of generating growth among small and medium sized businesses.

The Funding for Lending Scheme (FLS) that launched last August encourages banks and building societies to cheaply borrow money from the Bank of England, so long as the money is to fund businesses or individuals.

Unfortunately, The FLS appears to be vastly overlooked by banks as net lending between March to April 2013 fell £300m (figures from Bank of England). RBS, Santander and Lloyds have all reduced the amounts they have lent despite the FLS being extended to 2015.

The Bank of England have reported that the Latest figures demonstrate the upward trend in individual lending but an overall deterioration in lending to business. The British Chamber of Commerce (BCC) -representing over 100,000 UK Businesses-expressed disappointments with the lending scenario “despite the funding for lending scheme being in place for a year”. John Longworth the BCC’s director general stated “The real test for funding for lending, is whether it is able to get credit flowing to young and fast growing businesses. Unfortunately these growth firms are being left out in the cold”.

Bank funding to SME’s has declined as a result of the banking crisis, however these smaller companies are the vehicle to get the economy up and running again-The Confederation of British Industry (CBI) stated “an increase in growth in medium sized business could be worth an additional £20bn to the British economy in the next seven years if they can gain finical access via other channels.”

The recent public comments from government and groups alike are a response to the volume of complaints from smaller firms who are facing rejection from their once loyal bank. It could appear that everyone -apart from the banks- realise the crucial economic role SME’s play in the UK. Funding alternatives to bank loans & ‘cap in hand’ overdrafts must now take centre stage in order to get the economy flowing again. At Ashley, our primary objective has always been to be ‘the friend of the smaller business’. Since 1994, we have worked with many businesses that have been put on the funding bench and have created flexible funding solutions that are tailored to each company’s needs. Our 19 years experience has enabled us to perfect our own innovative approach to lending – making repayments flexible and in line with the ebb and flow of a business, removing the added strain of large, unmanageable repayments and ultimately equipping businesses with the financial tools they need to grow.

We believe that the smaller business should never be side-lined in the funding arena and have always recognised the smaller company as a crucial component to economic vitality.