Are UK SMEs fully aware of their lending options?
Many small businesses in the UK may be missing out on cheap financing options, a new study has revealed.
The results of research by The Federation of Small Businesses (FSB) have shown that 61% of SMEs are unaware of the Funding for Lending (FLS) scheme, despite recent reports that lending conditions are currently ideal for SMEs.
The FSB survey also found that alternative sources of finance are not widely known about, with less than 40% of the respondents reporting that they were unaware of the services offered by specialist lenders, such as peer-to-peer set-ups or asset finance providers.
Federation of Small Businesses National Chairman John Allan said: “Many small businesses have been affected by the lack of access to financial support during the financial recovery and have relied on non-bank lenders to keep them afloat. We hope the small increase in lending from Funding for Lending (FLS) continues to build. However, with many firms unaware of what FLS is we want to see an increase in communication that the banks are open for business."
More work still to be done in spreading the message
The FSB study found that there has been an increase in lending for the first time through Funding for Lending, with a £1.6 billion increase in net lending by main high street banks. Although £17.6 billion has been taken out of the scheme by the banks and lending is relatively flat, the data does show that the price of finance has begun to fall.
These figures are in spite of the fact that the survey found that only 29% of respondents are aware of FLS at all. The FSB wants the Government’s Business Bank to step up levels of communication between banks and small businesses, especially when it comes to offering guidance on government-backed schemes such as the FLS.
“We hope the increase in competition from non-bank lenders in the scheme will continue to deflate the cost of borrowing and boost lending to small firms. Only when the banks tailor their packages specifically to certain sectors and improve the way they advertise those products to small businesses, will small firms get the finance they need,” explained Mr. Allan.
By Phil Smith