Telling the truth about SME life today

Government funding schemes disappoint business leaders in 2012

Can the UK government cure the business lending drought” Certainly not if it goes on the way it has, according to Real Business readers.

Although the current government schemes may be many, they are not delivering what they need to. Less than ten per cent of you said that existing government funding schemes have helped your business, and suggested that there should be more of the same. What that says about the status quo is obvious: it needs to change.

Since this month’s Autumn Statement, change is set to arrive in form of a new state-backed business bank. We are all gravely aware that the specifics for said bank are yet uncertain, and that it will only open for business in 2014.

However, some hopes are clinging to Vince Cable’s business bank as a means to turn the maze of government schemes into a nicely packaged source of help for Britain’s high-growth businesses. Some 38 per cent of you agreed that the one initiative government should introduce in 2013 (alas, reality says it will be the year after) is one single business bank, encompassing all funding capital.

Wait, though: not all of you agree. Another 38 per cent waved aside the business bank in holiday-appropriate ?bah, humbug” manner, and requested that government should simply leave business finance to the lenders. No initiatives in 2013 at all, was on your wish list.

This joint majority proves that business leaders’ trust in the the government’s ability to boost business finance is divided.

At the same time, it’s clearer than ever that it continues to be a challenge for small and medium-sized businesses to access the finance they require from traditional sources. That makes it dangerous to rely too heavily on government coming to the rescue of those businesses most in need of support and scepticism is certainly justified.

The business bank will bring in £1bn of extra capital, to lever in private lending and to amalgamate existing initiatives for business funding. A positive step, no doubt – but we have already seen various other initiatives in play, to little effect. A theory is that there are simply too many, spread confusingly across businesses of all sizes and sectors.

Instead, should there be more focus on making businesses aware of the full range of options instead of restricting access to the pool of funding with the banks holding the key and the government trying to choose the doors?

We will shed some light on the many new ways to finance at the much anticipated Real Business Funding conference in March. The landscape of government schemes will have changed again by then. All that is clear now is that the way it is today does not help our businesses prosper as much as it must.


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