Keith Morgan, the head of the UK’s state-owned development bank, has said that high street establishments need more government help to enable them to lend more to smaller companies.
Various government schemes and initiatives have helped to make more funds available for small business lending. However, there are still issues for SMEs that are seeking finance.
Every year, the Federation of Small Businesses surveys its members to find out about the issues that stop them from growing. In 2013, 10% of firms said that the cost of finance was a barrier, but in 2014, the figure was 22%.
Morgan, the chief executive of the British Business Bank (BBB), recently pointed out that changing regulations meant that companies now need higher levels of capital before they can borrow from banks. Low-cost funds are available under schemes like Funding for Lending, but many firms simply do not have enough capital to take advantage of them.
To help to bridge that gap, the BBB is piloting a guarantees programme. Under the scheme, enterprises have the chance to borrow with less regulatory capital. However, the pilot will take time to see results.
In the meantime, many firms will continue to turn to alternative forms of lending to help them to secure the funds they need to grow. At DJB, we offer a range of asset finance solutions that companies of all sizes can use to fund growth and secure their cash flow. Please get in touch to find out more.