Last Monday (18 June 2012) the Federation of Small Businesses (FSB) warned that Britain’s banks had restarted their lending squeeze, starving small companies of credit. According to the FSB’s latest quarterly Voice of Small Business Index, which surveys the sector’s confidence, 40% of small firms applying for credit are being turned away. Among the damaging effects of the squeeze are the tenth consecutive quarter of job cutbacks, and a drop in confidence among small businesses and entrepreneurs in every industry sector except health and motor services.
Yesterday a ray of hope broke through the economic clouds, in the form of the 100% take-up by Britain’s banks of the Bank of England’s offering of £5 billion in cheap loans with a rate of 0.75%. It appears that all the major banks applied for the six-month loans under instruction from Bank of England Governor Sir Mervyn King, who wants the scheme to be viewed as a mainstream source of funding rather than an emergency measure.
The facility, which will be presented at least once a month, is one of a number of measures designed to bolster the economic recovery, in the face of the banking industry’s tendency to hoard money during the escalating eurozone crisis.
If the banks do soften their lending stance towards SMEs as a result of this and other government-funded measures, will your business be well placed to take advantage? In a series of blogs during the next few days I will be offering some tips on how to create a business plan that will capture the attention of banks and other lenders.
In the meantime, for advice on optimising your chances of securing funding for your business, please email me or call me on 020 7099 2621.