General business news and business finance blog
State SME lending shortfall fuels invoice finance growth
The headwinds of financial instability, borne of fiscal uncertainty in the Eurozone and the US, are buffeting the global economy. The raging of this storm will do nothing to ease the pressure on the UK small business sector and will place government SME lending policy under yet further pressure.
The debt crises affecting the US and the Eurozone are headline news and small businesses in the UK will be waiting with baited breadth to see how events affect their future, in particular as exports have emerged as a key growth sector. Will the government change tack with regards to its small business strategy?
There is an argument that this latest financial wobble should spur the government into handing small business more help. The financial pages have been populated recently with a growing number of stories telling of falling confidence in state SME lending policy. A new study from the Open University, and supported by the Finance & Leasing Association, only adds more fuel to the flames.
Research from the Open University’s Quarterly Survey of Small Business in Britain showed that tax incentives for small businesses, designed to help these companies invest in new equipment, are too complicated and are failing to boost spending. Another sign that the government is coming up short when it comes to SME lending is the growth of the alternative finance sector.
This growth includes the appearance of websites offering bulk-buying discounts for SMEs, along the lines of the service that Groupon offers consumers, and the rising profile of private funding organisations. But perhaps more illustrative of this trend is the fact that selective invoice discounting and import and export finance are now firmly established.
It is hard to look ahead in economic terms at the moment, but even if the government does offer SMEs greater support in the short term, it is seems that alternative finance is very much here to stay.
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