Government must provide funding to stimulate SME
Chartered Accountants Clement Keys has called on the government to stimulate the SME sector and support growth in this year’s budget due on 21 March 2012.
Clement Keys partner Ian Yorke believes that despite previous promises the government has not really put small business at the heart of its business growth strategy.
“Time and time again we have seen promises that have not been fulfilled. Take Project Merlin for example. Last months figures from The Bank of England illustrated that Project Merlin had not achieved its targets.
“Total net lending from the five main UK banks fell in every quarter of 2011, with a 3% drop in net lending in the final quarter of 2011. The figures also confirmed that the five banks had missed their lending target to small businesses.
“Without access to funding businesses are having to turn to family members to fund their business. A survey from the FSB found that in new businesses between 1-2 years old 70 per cent used savings and inheritance to fund their business, 34 per cent got money from friends and family and only 25 per cent used a bank overdraft.
“The government must listen to business and the organisations that represent them such as FSB and find ways to help small businesses access the finance they need.
“Whilst I am hoping to see measure in the budget that will create more competition in the high street banking and better promotion of the alternative finance sources there is a bigger issue that lies with the banks rather then the government.
“The banks are not lending because they holding onto their capital in order to re-build their balance sheets and will continue to do so whatever measures are introduced because of the way the system works.
“So whilst we wait for the system to change we must hope that what we have available can be improved. Initiatives such as peer to peer lending, asset backed finance in the Business Finance Partnership fund and better community development finance are all on my wish list.”