Confusion reigns in access to finance debate
BUSINESSES and advisers are confused about the number of financial products and funds on the market, according to a key regional investor.
Speaking at a discussion on Access to Finance at Barclays in Manchester, David Colclough from the Business Growth Fund, said that while there is an ongoing perception that the banks aren’t lending – particularly to SMEs – there is “confusion” about the products, services and funds that are available.
Regionally, there is the North West Fund, the Government’s Regional Growth Fund, the Business Growth Fund, while there are other pots of cash available to businesses in certain sectors, including Enterprise Capital Funds.
Mr Colclough said: “It’s clear there is a lot of confusion in the market place among corporates and advisers as well, and I think the challenge is possibly one of communication – people don’t basically know what is available.”
Mr Colclough, whose organisation made its first North West investment last month, in Manchester food business Barburrito, said the £2.5bn Fund has the “appetite and the cash to invest.”
“We were set up a year ago, with a blank sheet of paper, and so far we’ve done seven deals, and are in exclusivity with four more.”
Michael Hartig, director, corporate banking at Barclays’ Manchester, agreed that this issue needs to be addressed, but said that while there is supply – albeit at higher prices than pre-recession – and deals are taking longer to complete – many businesses are “hoarding cash” and paying down debt.
He said: “There is supply out there, but demand is muted – lending is, and will remain a core component of what we do.”
David Madoc-Jones, a debt advisory partner at KPMG said it was undoubtedly true that the “rules of lending” have changed since 2007, but banks are lending.
“I think it is helpful for corporates who are looking for finance to try and put themselves in their banker’s shoes, by this I mean having all the information their bank will want and being honest about the business’s strengths and weaknesses and having a Plan B if everything does not go to plan.”
Wayne Hiley, director of debt finance at Barclays said a key issue in the access to finance debate was that there are simply fewer lenders in the market place since the credit crunch – particularly with the Icelandic banks having re-trenched.
He said price of finance on the wholesale money markets had increased due to regulatory issues and concern over exposure to debt in the euro zone.
The event showcased TheBusinessDesk.com’s Access to Finance supplement, produced in association with Barclays. Click here to download the supplement .
