Platform Black Invoice Trading
By Platform Black – 16th May 2013
Platform Black was at Downing Street on Monday to hear Prime Minister David Cameron’s enterprise advisor, Lord Young, deliver his second report on ways to fire up business growth in the UK.
Crucially – and as anticipated – Lord Young identified the UK’s small businesses as being vital to the recovery of our economy. His aims include raising the aspirations and confidence of small businesses by giving them the tools and funding to grow. “There should be better marketing of government schemes to support new and developing businesses” he announced.
Our invitation to such an important financial gathering – and our name check in the report itself (p32) – is an endorsement of the Government’s continuing support for Alternative Finance. Micro-businesses make up 95% of UK Plc. and yet many are being held back by the lack of availability of credit.
As Colin Levins, our CEO, commented immediately after the launch: “Despite the Funding for Lending Scheme, the business credit pipeline is still badly blocked. Firms with the potential to grow – and take on new staff – simply cannot do so without access to funds, but the mainstream banks remain unable or unwilling to lend those funds. The government has realised that having a functioning, diverse supply of finance must be an integral part of its business strategy.”
We have highlighted many times how Britain’s small and medium sized businesses are becoming increasingly frustrated with their banks. Our survey last month revealed that more than three in five (62%) business owners felt their relationship with their bank had worsened over time. Many were scathing in their description of how their bank treats them, with 43% saying they were “frustrated” by their bank’s seeming inability to help.
So what is to be done about it?
Lord Young’s report highlighted specifically the battle to improve awareness of alternative sources of finance. To quote directly from it:
Small business survey data indicates that awareness of peer-to-peer funding amongst micro firms falls below that of other SME companies (27% compared to 35% and 45% for small and medium sized SMEs respectively). And micro firms are even less sighted when it comes to knowing where to find this type of finance – with 16% level of awareness amongst micro firms compared with 24% and 33% for small and medium sized firms respectively.
Well the industry is certainly doing its best to raise awareness and any help Lord Young can give will be appreciated.
Platform Black also backs the call for awareness of alternative funding to be raised amongst the intermediaries and advisers that micro businesses rely on for financial advice.
Optimistically, the Ernst and Young (E&Y) Item Club recently predicted that bank lending will increase in 2013 for the first time in four years. The forecasting group estimates that lending will rise by 3% to £440bn this year and by 8.5% to £447bn in 2014.
In E&Y’s recent survey of 370 firms, large companies confirmed they had seen an improvement in the availability of credit, but small firms, classified as businesses with a turnover below £1m, had seen deterioration. Medium-sized companies said access to borrowing was easier, but more expensive.
The E&Y survey is further proof, if further proof is needed, that small businesses are still struggling. The ‘Vital 95%’, as it has now been labeled, needs the support of the alternative finance industry to provide credit solutions and the alternative finance industry in turn needs the support of the government to grow.
The signs are looking good.
By Platform Black – 13th May 2013
Colin Levins, CEO of the alternative finance provider for business, Platform Black, commented:
“Youth does not have a monopoly on creativity – or entrepreneurship.”
“Lord Young’s call for the over-30s to be eligible for start-up loans neatly identifies two issues – the high numbers of more experienced people seeking to go into business for themselves, and the banks’ continued reluctance to lend to new firms.
“His focus on micro-businesses is understandable and welcome. They make up 95% of British businesses, and yet many are being held back by the lack of availability of credit.
“Despite the Funding for Lending Scheme, the business credit pipeline is still badly blocked. Firms with the potential to grow – and take on new staff – simply cannot do so without access to funds. But the mainstream banks remain unable or unwilling to lend those funds, and the government has realised that having a functioning, diverse supply of finance must be an integral part of its business strategy.
“The Young report’s proposals to make it easier for small businesses to bid for public sector contracts will help level the playing field for some firms.
“But its most perceptive call is for the government to market the Business Bank better. Though it has yet to launch formally, the Business Bank will have a vital role to play in helping businesses thrive in an environment where conventional bank credit is seldom available.
“The dramatic growth in alternative finance for business, from crowdfunding invoice finance to peer-to-peer loans, is proof that businesses have already embraced this change. The government must catch up.”
Star Radio’s Business Hub Show
Garry Mumford interviews Louise Beaumont as part of his ongoing investigation into alternative finance options for funding your business.