A campaign to let small and medium enterprises (SMEs) know that many are more likely to secure bank finance than they think has been welcomed by Alex Cunningham.
The Better Business Finance campaign, which aims to encourage applications for finance by highlighting that approval rates are significantly higher than they are often perceived to be amongst SMEs, comes after Stockton North’s Labour Member of Parliament last week questioned the Secretary of State for Business, Innovation and Skills on the failure of Ministers’ schemes to get banks lending to small businesses and entrepreneurs.
Figures from BDRC Continental’s SME Finance Monitor identified up to 270,000 businesses wanting to apply for finance but who never actually did so. While approval rates are almost 67%, only 37% of SMEs planning to apply for bank finance believe they will get approval. This lack of confidence has been identified as a key reason that the many small businesses and entrepreneurs do not apply for finance.
“Any programme that will promote lending to those SMEs who are so crucial to our economy is to be welcomed, and the efforts of the Better Business Finance campaign in specifically aiming to encourage more businesses and entrepreneurs to apply should be embraced.
“However, while this latest initiative may promote applications, more needs to be done to tackle the underlying problem – the persistent unwillingness of banks to invest in small and medium sized businesses. Only last week the Bank of England published figures that demonstrate shortcomings across the country, showing that net lending to business fell by an unbelievable £4.3 billion in the three months to November.
“And nowhere is this more important than in the North East. With SMEs – the real wealth creators within our economy – struggling to get the financing they need, the rate of unemployment is almost 25% higher than anywhere else in the country and rocketed by 16,000 in the past 12 months alone.
“More effective measures to stimulate bank lending are needed, with specific attention being paid to regions that are in clear need of assistance.”