Small businesses in Yorkshire are benefitting from a government fund set up to help businesses struggling to find finance. However, though this is a step in the right direction for alternate business funding, the limited lending figures from the fund has been described as ‘diabolical’ by one small business leader.
This regional fund uses high street banks to provide funding for firms looking to reinvigorate growth, but who are unable to find approval for funding through traditional channels. This is part of the wider government scheme offering £2bn to UK SMEs, but is an interesting case study in the difficulty of getting funds through these government initiatives.
Funding is being supplied by the RBS and Natwest. Since its launch in November of last year, five funding deals have been completed, making a total of £1.56m bank funding and £339,000 of regional growth funding. This figure is tiny when considering the overall extent of the funding that’s needed.
Nationally, this makes up part of the 58 deals completed, comprising of £2.8m in regional growth funding and £12.4m of bank funding.
HSBC, also part of the RBS Group, has completed 3 deals in the whole of the UK under its Assisted Asset Purchase Scheme, part of the regional growth fund. None of this is in Yorkshire, and there are no figures available for the value of the funding.
More Options Needed
The regional chairman for the Federation of Small Businesses, George Millward, commented, “Even though the funds are available, banks just aren’t interested in lending to small businesses which only need a bit of money to expand. They want to keep the money themselves and make it as difficult as possible for companies to borrow.”
Though banks complain of a lack of SMEs coming forward for funding, the small number of deals completed in the Yorkshire area shows the unwillingness of banks to lend to SMEs.
Businesses need more options for alternative funding to stop reliance on traditional means of funding and inaccessible government programmes. There are many other options for funding that need to be more available for small businesses. Microfinance and asset based lending are increasing in popularity. Factoring and invoice discounting in particular can free up cash flow for struggling businesses, by borrowing against unpaid invoices.
There are many options out there for businesses looking for alternative finance.