Will the new business bank that is currently being proposed by the government actually help small businesses? While the aim of this bank is to stimulate lending to SMEs, there are some experts who feel it won’t in fact help growth in the economy on a wider scale. While many small businesses find their confidence at an all time low due to the unavailability of funding, there are some who think the business bank isn’t the way forwards.
Many small businesses find themselves relying on extra funding to survive from one month to the next – all too often, SMEs are strangled by poor cash flow and don’t know what their best option for funding is. Invoice finance can help in this situation, and is in fact often more suitable than loans or overdrafts. Experts say that the business bank will help these types of businesses to survive, but it won’t help to stimulate growth – not if they’re using the funds received to bridge cash flow gaps from one month to the next.
Some experts are particularly down beat – there are those who believe that by temporarily prolonging the lives of struggling small businesses, more bad investments will be made and the UK economy will in fact be in a worse position than before. However, the business bank, while of course being willing to lend to small businesses, won’t be handing out loans to anyone – will the eligibility requirements be enough to stop this happening?
The business bank is one of a few government schemes aimed at addressing the current situation for business lending. Whether or not these schemes will pull small businesses out of their current survivalist mindset is not yet known – but hopefully they can go some way to solving the many problems experienced by SMEs in the UK.