SMEs confident of funding for investment plans

THE majority of SMEs in the North believe they would be successful if they applied for a bank loan to fund their investment plans, with more than three in five feeling confident they would be accepted.

According to new research by Yorkshire Bank, more than half (52%) also said they would feel even more confident about approaching their lender for new borrowing to fund investments such as recruiting new staff, or purchasing equipment and premises, if their bank were to ring-fence money to help their business.

Yorkshire Bank’s research, which surveyed more than 850 SMEs across the UK suggests investment in new equipment, premises and staff are now top of their priority lists.

While some caution still remains, more than a half (54%) of businesses are more likely to invest in growth opportunities than they were a year ago, pointing to increased confidence in themselves and the economy. More than half (52%) of SMEs in the north of England feel there are more opportunities for them to grow now than the same time last year.

The feeling of improved economic conditions felt by SMEs across the UK is mirrored in the latest official statistics which show UK GDP was 3.1% higher for the second quarter of this year compared to the same quarter in 2013.

Alan Young, regional director for business and private banking at Yorkshire Bank, said the survey suggested SMEs across the north of England are increasingly confident the economy is moving in the right direction.

He says: “We’ve listened to businesses to understand not just the challenges they face but what they feel are the opportunities which are presented in a growing economy.

“At the moment, businesses across the region are viewing the economy with increasing levels of confidence and preparing themselves for the opportunities which come about as a result. To take advantage of the improving conditions, many businesses are innovating, investing in new staff, expanding or purchasing their own premises and entering new markets.

“We’re doing the same. We’re investing in our business so we can help our customers invest in theirs.

“We’ve developed a range of customer initiatives to help free up cash to support their growth, from extending the term of existing loans to providing capital free periods and making it easier for firms to purchase their own premises.”

The survey also revealed that 35% had reduced levels of debt due to the recession. Nearly two in three businesses (64%) are looking for lenders to make it easier to borrow back the money they had repaid.

Mr Young continued: “We believe many businesses have the appetite to invest but some remain uncertain as to whether their bank will support them, or how they might go about securing additional funding. The starting point is a conversation with someone who understands you and the potential of your business and the sector in which you are operating.

“We also understand that speed of decision making is important so as well as providing customers with a clear timetable of the process from the outset, we are working hard to ensure it is a quicker process from start to finish and that businesses have a clear idea of how they can ensure their lending applications have the highest chance of success.”