It would have been easy to miss the news that the government is planning to introduce new measures to increase SME lending amid the headlines about the eurozone and quantative easing. Against a backdrop of invoice finance growth, the proposals are already sparking fierce debate.
Speaking at the Conservative party conference, George Osborne announced plans for a new “credit-easing” scheme to provide more small business loans. While SMEs are no doubt pleased to hear the Chancellor acknowledging that the banks aren’t doing enough in terms of small business lending, opinion is split over the measures. The Federation of Small Businesses has called them “timid and incoherent”.
What is more certain is that help is definitely needed. According to the Centre for Economic and Business Research (Cebr), nearly half of all small business owners are relying on personal loans, credit cards and savings to keep their firms afloat. The Bank of England has recently reported a downturn in SME lending by banks.
Will the government’s latest round of measures improve SME business banking and help spark the economic growth that the country needs? Only time will tell, but the increasing use of invoice finance highlights a “third way” for small business owners.
More flexible than products from traditional lenders and a sensible alternative to the use of personal finance, invoice finance products, including invoice discounting, factoring and asset finance, are growing in popularity as a way of raising capital and maintaining cash flow.
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