Often one of the major obstacles preventing SMEs from growing, or in some cases surviving, is the lack of available finance. Even those with the right credit history don’t always get the help they need from the major banks.
New rules announced by the government should go some way to helping these businesses and reduce the need for emergency corporate recovery advice.
More Financial Help
During a speech at the Innovate Finance conference held in London, the Chancellor, George Osborne, announced these new rules. They will mean banks have to offer alternative financial routes for SME customers who they refuse loans to. This could boost the finances that are available to SMEs and provide support for the economy.
The financial help from the government will amount to £100 million, which will be used to increase the number of lenders offering alternative finance. These sources can include challenger banks, asset finance providers, crowd-funding businesses or direct lenders. The alternative providers tend to look at each case on an individual basis and provide a tailored approach for customers.
Strength of the Big Four
The government is looking to reduce the stake that the big lenders have in providing loans to SMEs. Presently, 80% of small-business loans are provided by the four biggest banks, and financial support for SMEs is weakening. Bank of England figures show that in the first three months of 2014 there was a drop of £723 million in the amount lent to SMEs by the major banks. They reject about 40% of SME applications, and these companies don’t always know where else to go.
Once banks are forced to provide this help for rejected customers, small businesses will have a better idea of where to look. This will increase the amount of money that is lent to SMEs, who often require corporate recovery advice simply because they can’t locate the right financial backing to survive.
Burton Sweet can provide tailored corporate recovery advice for businesses that face tough financial decisions. Whatever stage in the financial process your business is at, we can provide help. Contact a member of our expert team, who will be able to help you make the right choices for your business.