The National Loan Guarantee Scheme (NLGS) has been formally unveiled and a series of SME finance measures have been announced, but the 2012 Budget for business has still attracted some criticism, with alternative sources of SME credit, such as invoice finance, remaining a pertinent topic.
The NGLS, designed to improve SME lending, is finally with us, introduced alongside measures such as a reduction in corporation tax, the simplification of tax for SMEs and research and development tax credit in the 2012 Budget.
The Budget certainly included a strong focus on business, but in the wake of Wednesday’s news, there have been questions and comments that underline the limitations of mainstream small business lending and the growing role that alternative SME finance products, such as invoice discounting and factoring, will play going forward.
Notably, a number of banks have opted out of the NLGS, the largest being high-street major HSBC, while concern has been raised over a £25,000 lending floor as part of the credit easing programme. In addition, the British Chambers of Commerce (BCC) has criticised the government for not doing enough for the companies at the smaller end of the SME scale.
So, has the 2012 Budget delivered in terms of SME finance? Has the government put a plan in place to get small business lending flowing again? Only time will tell and perhaps we’re missing the point by expecting a fix-all SME finance solution from the Coalition.
Maybe mainstream banks shouldn’t be expected to cover all SME finance needs any more – SME lending will hopefully improve from these banks, but alongside a greater role for alternative SME lending facilities, such as invoice finance and asset finance, which will continue expanding to meet the small business credit needs that high-street lenders struggle to provide.
The government has been increasingly vocal about the growing role of alternative SME lending facilities, which is an industry that the BCC continues to support: tellingly, commenting in the wake of Budget, it urged the government to look at innovative ways of providing credit to viable firms.
To find out more about A&T Business Associates services, contact us on 01903 602211 or info@atbusinessassociates.co.uk