The 2012 budget is due to be announced later on today, and though it looks to be more a round up of the papers rather than a real surprise, there will be new business funding measures for SMEs. One measure is in the form of the Business Finance Partnership, offering £1bn of funding to mid-size businesses.
George Osbourne will give details of the government scheme which will see the government co-investing with private sector investors in managed funds. These can then lend directly to mid-sized businesses seeking alternative funding to the banks.
From this scheme, there will also be £100million allocated to helping businesses with a turnover of less than £500million, again helping to boost alternative finance channels outside traditional loans and overdrafts.
The Breedon report recently recommended pooling loans and private placements of debt, which this money will help to achieve.
Alongside measures for mid-sized businesses, the National Loan Guarantee Scheme will also help to cut borrowing costs for smaller businesses. £5bn of funding for small companies is set to be released over the next six months.
Many experts have welcomed the lower price of credit for small businesses. However, there are still calls for greater transparency and accessibility for alternative finance options, which will help to reduce reliance on the banking sector. In particular, access to funding needs to be improved for those businesses who are based outside of London.
The NLGS is not a ‘silver bullet’ and will do little to change things for businesses struggling to find bank finance in the first place. However, there are alternative funding solutions out there – factoring and invoice discounting are flexible, affordable and attainable means to increase cash flow. They can free up funds tied up in unpaid invoices, allowing your business to continue growing.
If your business is struggling to find finance, it’s worth looking into the government funding schemes. However, there are still other options – which more and more companies are employing.