Government falling short in supporting UK business funding

It's no secret that gaining access to business funding remains the number one priority for business owners across the UK. However in these challenging economic times, which see banks continuing to impose strict lending criteria on firms, and the announcement of further cuts in public sector spending, many financial advisers may be asking the question – is the Government going far enough to support SMEs?

The answer, according to Andrew Bullard, head of business at leading invoice finance broker Cashflow UK, is no. Andrew explains: "Recent government initiatives designed to support UK businesses are only a drop in the ocean in terms of what is required to truly help firms in the current economic climate. The recent unveiling of the Business Growth Fund, is a prime example. It is encouraging to see that Vince Cable's demand that banks take action to increase financial support for UK businesses is being taken seriously, but by providing funding for companies with a significant turnover (between £10m and £100m), rather than newer and smaller businesses, the Government is clearly neglecting the SME end of the spectrum.

"Furthermore, it's no secret that the Enterprise Finance Guarantee (EFG), designed to fund businesses which are refused credit by the banks, has not been well communicated to the small business community. Figures from the Institute of Directors show that a staggering 83 per cent of firms which were refused credit were not given information about this government initiative. Bearing in mind the Government announcement to extend this scheme for the next four years, it is crucial that it is made more accessible to those who need it most.

"Businesses are looking for support and insight into how they can access finance and they are not finding the answers from the Government. Therefore, the role of the financial intermediary has never been more important because until firms can rely on the Government, it is down to the financial intermediary to guide their clients through this minefield in order to help them build strong financial foundations.

"This challenge is made harder by the fact that so many businesses appear to have a limited understanding of the funding solutions available to them. Invoice finance, for example, is often still overlooked by many businesses in favour of more traditional routes, such as bank loans, despite the fact that some of these are becoming increasingly inaccessible for businesses due to the risk averse approach banks are taking.

"Education is essential and I would urge the UK's financial intermediaries to ensure that all businesses seeking funding are made fully aware of every possible option available to them in order for them to make the right decision. Considering George Osborne described the emergency Budget as a plan for an 'enterprise-led recovery', to be driven by the UK's small and medium-sized businesses, the Government should also be looking to bridge this knowledge gap and educate today's business leaders."

Cashflow UK is a leading finance brokerage specialising in factoring and invoice discounting and its specialist team of financial experts is able to offer impartial advice and find your client the best provider.