SMEs 'unreasonably' denied funding

The Bank of England published data last week on the use of the Funding for Lending Scheme, showing the lending figures to UK SMEs…

Net lending to participants was £0.6bn in Q1 2015 compared with -£0.8bn in Q4 2014, with a number of institutions having expanded their lending in this same period. 

Aldermore Bank was placed amongst the top two lenders to SMEs in the Funding for Lending Scheme by the Bank of England, having lent £132m in Q1. 

“We are delighted to remain a top two lender to Small and Medium-sized Enterprises in the Funding for Lending Scheme. This highlights our commitment to helping small and medium-sized businesses grow,” said Phillip Monks, CEO of Aldermore. 

“We know how important SMEs are to the continuing economic recovery and it is imperative that banks focus on providing flexible finance for SMEs, as well as wider support in the form of good customer service.”

However Simon Goldie, Head of Asset Finance at the Financial and Leasing Association, felt not enough was being done for SMEs.  

“We welcome the support for enterprise, but would also like to see the Government provide a comprehensive online directory of finance providers to help firms find the funding they need in a one-stop-shop,” said Simon. 

Bob Sturges, Head of Communications at Omni Capital, agreed, stating the Funding for Lending Scheme has had “patchy success” since it was launched.

“An early error was to restrict access to licensed banks and building societies only. This put at an immediate disadvantage the new generation of lenders then emerging from the rubble of the financial crisis,” said Bob.

“To succeed, SMEs require ready access to credit. Many have unreasonably been denied this in recent years. They've survived only through a combination of self-imposed cost-cutting of a severity that would have the public sector up-in-arms, or because of the alternative lenders.

“I suspect many will take some persuading to return their trust to the bankers who left them high-and-dry.”

John Davies, CEO of Just Cashflow, said there was a constant debate whether schemes such as Funding for Lending or banks were lending enough to SMEs. 

“There are good reasons why the Banks cannot meet all of the finance demands from SMEs and this is why alternative lenders have an important role to play,” said John.

“This is in terms of providing valuable additional funding and helping businesses establish a record of taking and repaying credit. 

Ashley Ilsen of Regentsmead agreed that alternative funders could fill the gap left by mainstream banks.

“Particularly relevant for development finance as a lot of builders and developers were let down by their funders during the recession,” said Ashley.

“This was a great time for us as we were winning favour with a lot of our clients by rescuing them from some unfortunate situations where funding lines were pulled overnight.”

Bob from Omni Capital also emphasised the role trade associations play in funding SMEs and praised the NACFB in helping find options for the sector. 

“Special mention should be made here of the NACFB which, under Adam Tyler's leadership, has done as much as anyone to draw the government's attention to the plight of the SME sector and the role played by non-bank lenders in helping alleviate it,” added Bob. 

“It is a near-perfect example of the positive role our trade associations can play.”