Plans for a British business bank have injected fresh impetus into the issue of SME lending but recent news concerning the government’s EIS initiative and NI payments suggests that the flow of small business funding remains slow, and that the role of invoice finance remains as vital as ever.
The UK may be out of recession but any impact on small business lending is likely to take a while to occur. The same can be said for the new SME bank, which isn’t due to open until 2013/14. Indeed, as the underwhelming performance of the government’s EIS scheme for start-up funding illustrates, access to SME credit remains challenging. Estimates for the EIS scheme indicated that SME investment will be down by £106 million for the 2012-13 tax year compared with 2007-08.
A new report from the Adam Smith Institute further illustrates the pressure that small businesses remain under. In the report, entitled Unburdening Enterprise, which is focused on how to improve conditions for SMEs and stimulate sector growth, the institute issues a plea to the government to drop national insurance payments for small businesses. Other measures include more help for businesses to chase late payments and a simplification of the regulatory system for SMEs.
Late payments have long been a bugbear for small businesses and trying to maintain cash flow under such conditions has led to many falling foul of banks’ increasingly cautious attitude to SME lending. This point alone highlights the important role of invoice finance, which as recent figures from the Asset Based Finance Association show, continues to grow in popularity. By using services such as invoice discounting or factoring, businesses are provided with extra protection against late payers from a SME finance facility that also ensures a good working relationship with clients.
To find out more about A&T Business Associates services, contact us on 01903 602211 or info@atbusinessassociates.co.uk.