Business Growth Fund Won’t Help Us, say SMEs

As part of its commitment to improve business finance in the UK, the British Bankers Association’s (BBA) Taskforce has proposed a Business Growth Fund – but it will be of no use to small firms, businesses have warned.

Representing more than 200 banks, the BBA’s Business Finance Taskforce has announced 17 ways in which banking plans to help business, including making their lending principles clear, enabling mentoring services, helping micro enterprises, and offering timely loan reviews for re-financing firms.

Taskforce chairman and Barclays chief executive John Varley said:

“The Taskforce has agreed a range of measures to help businesses get the advice and support they need, provide wider access to finance and deliver better customer service.”

However, a large part of the Taskforce’s pledge to ensure better business access to finance takes the form of the £1.5 billion Business Growth Fund. Created over several years, this fund would only provide growth equity to companies with an annual turnover of £10 million to £100 million.

“This fund is trying to tackle the business world’s current shortage of investment finance, but only a small minority of businesses will use it.”

said British Chambers of Commerce spokesman, Steve Hughes.

“Access to bank lending is a considerably more pressing concern for most small firms.”

Mike Handley, founder of small business Graphic Results, agreed:

“The fund is for medium-sized or large firms with high turnovers. But it’s the businesses with £500,000 turnover which have the real issues with access to finance.”

“The banks are lending more now, but they are entirely risk averse. They want every loan totally secured. The criteria you have to meet to get funding are very strict. Small businesses are now being penalised for the banks’ stupidity over the last few years.”

Hughes explained, however, that credit conditions have improved recently for small firms.

“Although we only have anecdotal evidence, lending to small firms has improved marginally.

“If a viable firm is turned down for credit at one bank, there is still enough competition that the owners should be able to go down the road for credit. Businesses on the margins will lose out, but if you are a viable firm with a good business plan you should be able to get credit.”

Business Growth Fund will not Help Us, say SMEs

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