Having heard the Chancellor’s plans for a new small business credit scheme, the SME sector is waiting with baited breath for the second phase of his growth review. However, the Confederation of British Industry (CBI) believes the key to revival is greater investment in mid-sized businesses.
Among its requests, the CBI wants it to be easier for large companies to invest in mid-sized ones and a restructuring of entrepreneurs’ relief to encourage longer-term investment. The aim is to create a strong backbone of medium-sized companies that would help nurture growth across the business spectrum, including the SME sector.
Whether the government heeds this call remains to be seen, as it may want to have a more immediate impact on SME finance. Interestingly, Andrew Tyrie, the chairman of the Treasury Select Committee and MP for Chichester, has called on the government to give the banks a break and relax new liquidity rules, claiming that doing so would help boost business lending. George Obsourne certainly has a lot to consider in terms of how to improve big bank business lending.
One area of interest is likely to be non-bank SME lending, which has grown markedly in recent years. Invoice finance has been part of this non-bank business finance growth, led by flexible finance products such as invoice discounting. While the Chancellor is likely to focus on traditional channels, the continued development of the non-bank lending industry would appear to be just as important.
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