A prominent group of business leaders has called on the government to do more to boost SME growth. Sound familiar? As the comments raise more doubts over the Funding for Lending scheme, the focus falls again on alternative SME finance services such as invoice discounting.
The British Chambers of Commerce is among the organisations that have voiced the same sentiment over the last year as the Institute of Directors, which has called on George Osborne to do more to help the economy and the business sector. While the group has not been overly critical of the government’s attempts to stimulate growth thus far, it argues that the chancellor needs to increase his activities in this area, which is a sentiment that suggests that it believes that the Funding for Lending scheme isn’t the final piece of the SME finance jigsaw.
A key concern is the state of business sector confidence. While there is optimism among small businesses, it is clear that this confidence has a fragile base. According to the CEO Confidence Index, 70% of small business owners expect sales revenue to increase, while the Institute of Chartered Accountants in England and Wales has reported that business confidence grew in the second quarter of the year. At the same time, the Confederation of British Industry has reported an improvement in business sentiment, in particular among SMEs. However, there is a general realisation of the unpredictability of the business landscape.
These recent developments underline the importance of alternative small business lending facilities such as invoice discounting and factoring. The use of these SME credit products continues to rise as the banks remain cautious. As such, it seems clear that the alternative finance sector is vital to nurturing not just small business confidence but also industry growth.
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