Lenders need to be innovative to fund SME growth
LENDERS need to ‘get clever’ and innovate more in the way they provide finance in order to aid SME growth, according to the newly launched White Paper Financing Britain’s Growth.
The document explores the challenges currently facing UK SMEs and outlines the prerequisites for business growth as expressed by leading businesses and business bodies.
The White Paper, summarising an annual Thinktank organised by leading Invoice and Asset Based Lender, Venture Finance, combines the views of the Department for Business, Innovation and Skills, the British Business Angels Association, KPMG, the Asset Based Finance Association, the Financial Services Research Forum and various successful SMEs.
According to the research, challenges facing SMEs include:
• A reluctance to invest in their businesses or take on more debt
• Cashflow problems resulting from lengthening credit periods and increasing late payments
• The increasing risk of insolvency as deferred tax debts start to bite
The White Paper also outlines important considerations for lenders including:
• An innovative approach to funding solutions
• A desire by SMEs for flexible finance to match their business needs
• An increasing focus on reliability and service to a point where it becomes more important than price in funding relationships
Peter Ewen, managing director of Venture Finance, said: “SMEs are facing unprecedented challenges as they seek to forge a path to recovery and lenders need to play their part.
“The central issue is ensuring businesses have access to reliable and responsive finance, which means confidence in financial institutions must be restored. Priorities have shifted from cost to service and an ongoing dialogue at a personal and local level is essential to a trusting relationship – this is what our Thinktank and White Paper aims to address.”
David Smy, of the Department for Business Innovation and Skills, said: “Ensuring sustainable and secure sources of finance for business is central to the Coalition Government’s ambition for growth, and we are committed to discussing the challenges and opportunities in this area with a broad spectrum of interested parties.”
