The unveiling of a £950 million investment in regional business by Nick Clegg has been warmly welcomed by 119 businesses and partnerships. He believes this injection will help spark wider growth, but what do small businesses think? Should they feel short changed by the move?
The government has been fighting growing criticism that it isn’t working hard enough to improve SME finance services and while the second tranche of regional growth investment shows activity – Clegg believes the injection will secure over 300,000 jobs – the move does little to suggest that it is any nearer to achieving the improvement in SME credit services that is being called for.
Interestingly, Emma Jones, an ambassador for the StartUp Britain campaign has recently spoken out against government policy, telling politicians to stop associating jobs with growth. She says the SME sector is a lot more nuanced than job statistics, with a growing use of outsourcing a key trend, a sentiment that suggests the government needs to take another look at its SME finance strategy.
Regardless, it is clear that small businesses are increasingly looking for alternatives to traditional bank lending services. Asset-based lending, including invoice discounting and factoring, is one format that is growing in popularity and this trend is not just occurring in the UK. Recent figures from the US Commercial Finance Association show a marked increase in the use of asset-based finance, up by US$2.6 billion in 2010 compared with 2009.
While the new investment is a boost, there is the suggestion that government business finance thinking needs to be more targeted. After this move, what is left in the pot for the Chancellor’s small business credit scheme?
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