The government has long been saying that exporting is the way forward for all sorts of small and medium sized businesses. The House of Lords Committee on Small and Medium sized enterprises has once more highlighted this, calling on government agencies, UK Trade and Industry (UKTI) and UK Export Finance (UKEF) to do more to help ensure that SMEs have all the know how and tools to take the next step in their business growth. Exporting can seem intimidating, especially for small businesses, but help is out there – and the Committee wants more to be done to highlight this.
With nearly 5 million SMEs in the UK, this report released by the House of Lords (entitled Roads to Success: SME Exports) recognises the huge role they have to play in helping UK economic recovery. An export-led recovery in the business sector is something the government has been wanting to encourage, but so far has not fully achieved such a thing.
The Report has revealed that only a very small number of SMEs are helped by UKEF – only 21 were helped by the agency up to August 2012. This shows that while the government may say exports are the way forward, either businesses aren’t aware or they’re not being shown to the right places for advice. The Report calls for the services to be better promoted to SMEs as well as banks, who act as the gatekeepers of the scheme. The Committee say that unless banks are prepared to take on some of the risks of lending to exporters then UKEF’s programmes are ‘dead in the water’.
Availability of finance was another thing covered by the report, especially when related to SME exporters. The committee found that the transition from loan decisions being made on a case by case basis to a more formulaic approach has made it more difficult for SMEs to access finance. They said local bank managers were better placed to assess risks rather than just reject the majority of SME loan applications.
The Committee also says that SMEs must do more to explore alternative finance options – invoice finance amongst them. Raising awareness for exporting means knowing how to finance it, and that includes alternative finance sources as well as the banks.