Let's talk about the B-Word!

Brought to you by Capitalise

Let's talk about the B-word. You know the one, that’s right: Banking. Oh, you thought we were going to say Brexit, didn’t you? Well, we were going to say that, too.

That’s because the two things are tied. While Westminster remains deadlocked in a state of complete panic, the country’s economy and consequently our financial institutions have become rather risk averse.

According to one study of the syndicated loan market indicates that Brexit induced a 22% drop in loan issuances in the UK, while the average share of newly issued loans going to British companies has reduced after the referendum.

Brexit and loan applications

As the banks’ purse strings tighten, it’s the UK’s smallest businesses that bear the brunt. The British Business Bank estimates the total value of rejected loan applications by the UK’s small business amounts to around £4bn annually.

That’s money that’s needed for investment, growth and new capital investments. Clearly, the desire and ambition among Britain’s small businesses remain, but they’ve been left behind by an establishment locked in crisis.

Michael Jordan on politics

This is not about politics. Michael Jordan, the consensus greatest basketball player of all time, once famously quipped that “Republicans buy shoes, too”. What he meant was that politics wasn’t his concern, succeeding and meeting customer demand was.

Jordan’s realism will resonate with business owners just trying to get by. The issue for businesses is not necessarily ‘leave’ or ‘remain’ (or ‘Norway 2.0’ for that matter), it’s about opportunity.

The UK remains a large, robust economy with plenty of room for businesses to blossom. But without investment, the potential for growth will be limited, whether the UK is inside or outside the EU.

Alternative lenders can provide… an alternative

Luckily, the past few years have seen countless alternative lenders pop up. The high street banks are no longer the only lenders in town. A small business has a smorgasbord of choices available, but with no guidance might find this new world challenging to navigate.

How can the accountant help?

At Capitalise - we believe this is where accountants can help. As bank lending contracts and the alternative market continues to grow, perhaps no other professional is better placed to help business owners make sense of it all than the accountant.

The accountant has a more profound insight than any bank manager could ever have had. They work side-by-side with their clients, keeping a close eye on finances and understand what’s needed. Combined with open banking, which enables businesses to share their bank data with other lenders, this intimate familiarity is more potent than ever.
So yes, it is all about the B-word for businesses. But just not the one you think. Banking (and lending) are of greater immediate consequence to the UK’s army of growing companies. All they need is guidance, and we believe accountants can give it to them.