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Liquidity Returns to UK SME Finance Markets

New research indicates that investment in the UK’s small businesses may be on the rise for the first time since the financial crisis. What opportunities does this present to SMEs?

Good news for growth?

The new Small Business Finance Markets Report published by the British Business Bank indicates that business lending increased by 75% in 2015. Bank lending also increased over four consecutive quarters in 2014-15, while equity finance grew by 43% in the 12 months leading up to October 2015.

However, it hasn’t all been good news for businesses. Equity financing has been largely concentrated in London and the South East, whilst banks – which accounted for 80% of loans to small businesses in 2014 – turned down loan requests from around half of the start-up companies who applied for them.

Medium-sized businesses (defined as those having at least 50 employees) were more successful in obtaining finance. However, only 3% of UK start-ups eventually become mid-sized, according to the British Business Bank. This is far lower than in the United States, where around 6% businesses scaled up.

The road ahead

The British Business Bank’s £100 million ‘Help to Grow’ pilot scheme is a step in the right direction for regional and micro-firms, as is the Angel CoFund, which has so far invested £24 million in businesses classed as ‘high-potential’.

Minister for Small Business Anna Soubry stated: “Even though the lending landscape is improving, I’m well aware access to finance remains a big issue and want to see even more help for small firms looking to invest and create jobs for people.”

While there are promising signs of liquidity returning to the SME finance markets, availability of funding remains uncertain for smaller businesses. These firms may be able to build their cash reserves through the collection of outstanding arrears. Contact Dukes Bailiffs today to discuss how we can assist with fair, transparent and ethical debt collection.

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