According to a study undertaken by Bibby Financial Services, small and medium enterprises across the UK do not believe that they are receiving sufficient financial backing to support their business.
With reports claiming that over half of SME managers and directors feel that the UK is ‘not a better place to run a business since 2010’, it is evident that more needs to be done to restore confidence in traditional financial channels.
Despite efforts made by George Osborne to assist SMEs in the 2013 Budget, through the clarification of the Funding for Lending Scheme as well as the National Insurance deductions; businesses still feel that they lack the basic support for growth.
Only six per cent of those surveyed said that the proposed Business Bank (created through the FLS) would benefit their company, highlighting the necessity for greater political understanding. As the Bibby report suggests, immediate financial support is needed as opposed to reforms that could benefit businesses further down the line.
On the face of things, the Coalition Government appears to be doing all it can to help SMEs. They recognise the significance of small businesses to economic progress and have even announced this year that £30million will be dedicated to SMEs through the implementation of ‘Growth Vouchers’.
However, for those starting a new business, the reality is that funding is not as accessible as it should be. In many instances, banks have emerged as an obstacle to financial support rather than a source for help, resulting in many SMEs choosing to seek funding elsewhere.
According to the study, only five per cent of SMEs believe that the current government understands their business needs. Consequently, many SMEs are turning to independent invoice finance providers for the resource that they require. Eliminating the middle man, invoice finance can offer the economic flexibility and stability that banks refuse to provide.
It is clear from the study that a greater focus must be placed upon economic support networks. Funding is central to the development of small businesses, and the government needs to recognise the enormity of its role in assisting SME growth.
As the study shows, seventy seven per cent of the managers and directors surveyed have previously been refused the amount of funding they applied for. This is an issue that must be addressed in order for the government to successfully support SMEs.