According to Bibby Financial Services the NLGS, which aims to encourage banks to lend to small and medium-sized businesses by offering cheaper loans at a one per cent discount to the banks’ standard lending rates, is fundamentally flawed because it will only help those firms already deemed as ‘acceptable’ for bank funding, which alienates many smaller businesses.
Bibby Financial Services has £340million to help small and medium-sized businesses gain quick access to flexible funding through invoice finance to enable them to survive and thrive in the volatile economy and capitalise on any potential growth opportunities.
Edward Winterton, executive director at Bibby Financial Services, said: “The NLGS is not addressing the real issue as we see it. It only helps those businesses that already have access to bank loans, which is a minority of small and medium-sized firms. Ironically, it is those firms at the smaller end of the scale, the family-owned firms and micro enterprises that have been most affected by the downturn and which are in most need of financial assistance.
“The other important point to make is that it’s not necessarily access to bank funding that small and medium-sized businesses want. Our SME research shows that only 13 per cent of firms applied for a bank loan in the first quarter of this year.
“The recent BIS Taskforce Report, which looked at business funding issues, highlighted that firms have been reliant on bank lending for too long and there is a very strong case for alternative sources of finance, such as invoice finance, to provide businesses with a greater level of funding choices. The Report also demonstrated that governmental initiatives aside, there will be an estimated funding gap of between £84bn and £191bn over the next five years.”
Mark Hartigan, group risk and finance director at Bibby Financial Services, added: “It is vital small and medium-sized businesses can gain access to funding quickly and easily to
enable them to grow. Since the amount that invoice finance providers can advance grows directly in line with sales, it is an ideal funding solution in the current volatile economic
“Our £340 million funding line direct to firms will help the thousands of small and medium-sized businesses that will inevitably fall out of the Government’s NLGS funding net. It
ensures that our doors are well and truly open for business and we have the capacity and flexibility to be able to meet the growing demand for invoice finance and take on even
more new business.”