“£20bn is a drop in the ocean”

“The government’s latest statistics on the number of SMEs in the UK show that if only half of UK SMEs requested funds, they would each be able to get a loan of only £8,811.88,” says Tracy Ewen, managing director at IGF, the Kent-based commercial finance provider. "This is hardly the solution that will crack the liquidity and confidence crisis in small businesses.”

Ewen says the red tape involved to secure these loans is a nightmare: “This won’t give a business a ‘quick cash injection’ if it’s on the brink.”

There are several different options for businesses to raise capital, other than pleading with the bank manager. You could borrow on your company assets. The principle of borrowing money secured on a business’s asset has been around the UK market for almost 50 years – but it’s only in the last decade or so that the industry has really taken off.

“It’s always surprising how few businesses realise that they can raise capital on their invoices,” says Ewen. “Another option is to secure funding against your company’s physical assets such as IT equipment, machinery, fleets or the business premises. Financing shouldn’t be limited to seeking a business loan.”

Those entrepreneurs relying on the government to save the day may have a long wait. The Conservatives say they want a "bigger, bolder, simpler" £50bn scheme to get credit flowing to all businesses – but the jury is out on whether even that will go far enough.

What should be done? Have your say.

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