So, one month on from the launch of the Funding for Lending scheme and questions continue to be asked about how to stimulate SME lending. At the same time, new figures show that the boom in invoice finance is not limited to the UK.
It is difficult not to read the recent calls for more government action on SME finance as evidence that the Funding for Lending scheme isn’t the final piece in the small business lending jigsaw. The next few months will be pivotal to whether the Bank of England-sponsored business credit programme is deemed a success, so it shouldn’t be judged too soon. However, that hasn’t stopped the Federation of Small Businesses (FSB) lobbying for an extension of the national insurance contributions (NIC) holiday.
The FSB believes an extension would help generate private sector employment, which has a clear link to SME sector growth and improved finance conditions. A new paper from the organisation is due shortly and its topics are telling: apart from the NIC holiday, it will address the greater provision of debt finance and a crackdown on late payments.
If the success of the Funding for Lending scheme is hanging in the balance, there is little doubt over that of invoice finance. Following on from figures from the Asset Based Finance Association showing a 7% rise in the use of invoice finance by small businesses in the UK and Ireland in 2011, new data shows that the invoice finance sector, including services such as invoice discounting and factoring, provided businesses in Europe with funding in excess of €1 trillion over the same period. The figure is confirmation of the key role that invoice finance is playing in providing SME finance.
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