In recent weeks, much has been made of efforts to improve bank SME lending, however, new information from the Bank of England and the Financial Ombudsman Service (FOS) has provided a reminder of why improvements are required and why the likes of invoice finance and asset finance have gained so much in popularity.
The government has laid its cards on the table in terms of SME finance over the last month or so, with a small business-focused 2012 Budget and the introduction of the National Loan Guarantee Scheme, and the reception has generally been positive, but new information from the Bank of England and the FOS is a no-nonsense reminder of why these measures were required in the first place and why, perhaps, they haven’t gone far enough.
The information from the Bank of England has underlined the continuing dissatisfaction some small businesses are experiencing with bank SME lending policy. The report pinpoints an increase in the cost of renewing existing credit facilities, rising arrangement fees and more stringent collateral requirements on new lending. It also highlighted ongoing late payment problems.
At the same time, the FOS has released information showing a 10% rise in complaints regarding loans and overdrafts to small businesses over the last year. According to the information, banks refusal to renew loan or overdraft facilities, or offering to do so only at a hugely increased rate, has been a key issue.
This new information is a reminder that SME credit remains an ongoing challenge and also underlines why alternative small business finance facilities such as invoice discounting, factoring and asset finance have grown so much in popularity and have become established as mainstream SME finance services for healthy small businesses.
To find out more about A&T Business Associates services, contact us on 01903 602211 or info@atbusinessassociates.co.uk