In a new survey, conducted by commercial finance broker Touch Financial, almost two thirds (59 per cent) of businesses questioned had applied for additional funding, such as a bank loan or an overdraft, at some time in the past six months. Incredibly, almost the same number (55 per cent) had seen their application declined.
In addition, a third of those refused (31 per cent) were given no reason by their bank as to why their application for finance had been unsuccessful. Furthermore, four in five (80 per cent) of those businesses refused bank funding were not given any information on alternative sources of funding.
Touch Financial commissioned the survey to expose the current absence of adequate funding provision for SMEs, and the impact on business confidence. The results have confirmed that an overwhelming majority of small businesses do not feel supported by the UK banks, while almost all agree that the Government could and should be doing more to help.
Perhaps unsurprisingly, in answer to the question ‘Do you believe that banks are supporting small businesses?’ more than four in five (81 per cent) of businesses responded ‘No’. Simon Carter, director of Touch Financial, is concerned that the help that the Government has promised has not been forthcoming: “Any business, regardless of size or sector, should be given access to finance, if not through ‘traditional’ bank lending, then via a number of alternative funding solutions that are available,” he says.
When asked ‘Is the Government doing enough to support small businesses?’ only two per cent responded ‘Yes’; more than half (56 per cent) of respondents answered ‘No’ and the remaining 46 per cent answered ‘Could do better’. Moreover, when asked about their awareness of a number of Government and bank-led initiatives, more than two in five (42 per cent) had never heard of any of them; the highest awareness was for Start Up Loans, which only a third (33 per cent) of respondents had come across.
“Small businesses simply aren’t getting the information and the support that they need if they are to be the primary engine for growth as the Government has suggested,” said Carter. “SMEs are in danger of being left up the proverbial creek and being told there are no more paddles.”
Barclays is now offering its SME customers an instant cashback injection of two percent on loans, which will immediately boost a business’ cash flow.
Called “Cashback for Business”, it follows on the heels of Barclays cashback loan offered under the £1.5 billion National Loan Guarantee Scheme (NLGS). As the NLGS cashback has now been fully utilised due to strong demand from customers, Barclays is continuing with cashback loans under the new Funding for Lending Scheme (FLS).
These reductions in the cost of borrowing are all made possible by FLS and the current low base rate which means that the cost of borrowing is at its lowest level for 25 years for the average UK SME.
Steve Cooper, Chief Products & Segments Officer, Barclays, said: “The cost of borrowing for UK SMEs has reached very low levels. SME borrowing is at its cheapest since 1987, and the combination of Funding for Lending and low base rates is also pushing down the cost of borrowing for personal loans and mortgages with super-low rates.
“Barclays will pass on the whole benefit we derive under Funding for Lending to our customers and we are optimistic that people will take advantage of this cheap time to borrow, and make the investment decisions that they have been putting off.”
Barclays hopes that Funding for Lending will create one of the most competitive loan markets in recent history and expects the UK’s leading banks to offer different cheaper lending products which will help fuel demand and competition. Barclays will actively manage its product offerings to respond to these market changes and will introduce new ways of channelling the benefit of Funding for Lending to our customers.
The CashFlows issuing service creates a ‘one stop solution’ that enables businesses to consolidate their card acceptance and issuing capabilities within an integrated model. CashFlows is a principal issuing and acquirer member of Visa and MasterCard but also offers a full programme manager package too, establishing relationships with processors, banks, payments networks and distributors on their customers’ behalf. This approach reduces costs and drives greater business efficiencies.
CashFlows has already cemented its first partnership in card issuing with ROK Pre-Pay, an international marketing and media group. In the strategic partnership with ROK, CashFlows will deliver prepaid card issuing services for two specific programmes, with an initial card order for over 50,000 cards.
This new solution complements CashFlows’ existing contactless card programme for businesses using the CashFlows Account, a fully integrated business account that brings together business account and merchant account facilities.
Nick Ogden, chairman and CEO, CashFlows, said: “The use of prepaid cards has never been stronger but businesses that want to offer programmes have been frustrated by the lack of regulated service providers and the time required for a programme to reach the market. CashFlows is pleased to announce the launch of its prepaid programmes, which have been designed to simplify the customer experience. We look forward to developing our relationship with ROK and working on further exciting programmes in the future.”
John Ondreasz, CEO at ROK Pre-Pay, said: “We have been looking to roll out a prepaid programme for the past six years but until now, we could not find a company that met our European demand for a single source supply, coupled with a requirement to work quickly and flexibly. As a company with an international presence and aggressive future ambitions within the payments industry, we are delighted to partner with an agile and responsive company like CashFlows and look forward to our agreement delivering new and innovative card programmes to our ever-growing worldwide customer base.”
According to Sky News, the FSA is currently talking to the banks involved about the content of the statement, which could lead to compensation for the SMEs affected. running into hundreds of millions of pounds.
Interest rate swaps are designed to protect customers against steep changes in interest rates by allowing them to hedge their bets. However, many customers have complained that they have faced excessive penalties due to the current low interest rate environment.
Sky News says the FSA has asked the major high street lenders which sold interest rate swaps – led by Barclays and the taxpayer-controlled Royal Bank of Scotland – to commit to writing to the hundreds of thousands of SME customers who took out these swap products.
The communications with customers will be divided into two categories: those who were sold relatively simple products, who are expected to have the opportunity for their cases to be reviewed; and those who were sold more complex products or were unlikely to have understood the downside risk they were taking on.
HSBC provided £3.1 billion of gross lending to UK Small and Medium-sized Enterprises (SMEs) in the first three months of 2012, an increase close to seven per cent (over £200 million) on the same period in 2011.
This announcement follows the bank’s earlier commitment to make at least £12 billion in total of lending available to SMEs during 2012 – surpassing what it lent in 2011.
HSBC’s International SME Fund is also proving attractive to businesses, with more than £1.3 billion of the total amount lent in the first quarter being borrowed by SMEs that trade or aspire to trade internationally. The £4 billion fund was established after findings from HSBC’s ‘Global Connections’ trade forecast predicted that over the next 15 years, the UK is set to increase its international business activity by around 60 per cent.
The International SME Fund provides specific support for UK businesses, with a turnover of up to £25 million who currently trade or aspire to trade internationally.
To ensure customers involved in overseas trade are fully supported, HSBC has also recruited more than 70 additional International Commercial Managers to date in 2012. The bank now has over 200 International Commercial Managers in total, located throughout HSBC’s network of commercial banking centres, with around 20 more to be recruited in the remainder of the year.
Jacques-Emmanuel Blanchet, deputy head of HSBC Commercial Banking Europe and head of commercial banking UK, said:
“HSBC is committed to supporting strong, viable UK businesses of all sizes and across all sectors, and our lending during the first three months of 2012 highlights this. We are on track to lend even more to UK SMEs in 2012 than we did in 2011 and are ahead of schedule to lend £4 billion to businesses who expand their activity internationally through the International SME Fund.”
“Trading internationally is critical for not only British companies who want to remain competitive in the future, but it is also critical to the UK economy. As such, in the first three months of 2012, we have increased by over 50 per cent our dedicated salesforce through the recruitment of additional International Commercial Managers to ensure that we are able to provide the high level support needed by businesses which are growing through international trade.”