Don't bank on their support
Despite billion pound handouts, and the Government’s Enterprise Finance Guarantee, the money doesn’t appear to be getting through to small businesses...
Last October the UK Government injected £37 billion of cash into British banks as part of their £500 billion bailout plan in an attempt to increase the money supply and lubricate the wheels of commerce. But from the business owner’s point of view, there still seems to be a blockage.
John Wright, National Chairman of the Federation of Small Businesses has gone on record saying, “With trade down and invoices increasingly being paid late, small businesses are having to turn to their banks for credit to tide them over. But, despite the Government’s £500 billion bailout, the banks still do not seem to be lending to small businesses”.
Neither are banks getting on board with other Government schemes to support small businesses through the lean times. One such initiative is the Enterprise Finance Guarantee, which was designed to support bank lending to good-but-newly-cash-strapped businesses. But instances of bank managers without knowledge of the scheme, or who simply refuse to use it, are putting unnecessary financial burdens on the already over-laden shoulders of business owners.
It’s all made a bit harder to swallow by ongoing bonuses for top executives. So when will the banks start lending again? Well, the truth is we just can’t tell. The combination of factors such as falling house prices and high levels of existing corporate and consumer debt are contributing to the current situation and are unlikely to change in the short term, no matter how much money is doled out by the Government to keep banks from going bust.
All this means that businesses have to be more imaginative about raising funds for vital cash flow, to keep their business moving. And many are turning to invoice finance for the first time. As an experienced and independent invoice finance broker, Cashflow UK can offer free and impartial advice if your traditional credit streams have dried up. If you have any questions, call us on 0800 132 156.
