The Funding for Lending Scheme is again back in the news, maybe because Syscap are launching a new Short Term Loan Scheme, but I was prompted to have a look at the current situation to see if there was still grounds for my pessimism.
There are continuing grounds for pessimism in that lending to small and micro businesses is not increasing, in fact it continues to decline. Is this really a cause for concern with the health of small and micro businesses? Despite the decline in lending from conventional institutions like the main clearing banks, in conversations with business managers in several of the clearing banks they tell me that they are lending money, sometimes significant sums. OK, the rates are not exactly attractive and the terms are stringent but there is money to be had.
So, there might be another reason for the decline, perhaps we are at the stage of “once bitten, twice shy”. There are businesses that have borrowed money in the past that suddenly, when things with the lending institutions got tough, found themselves facing demands to pay back, re-finance or else. This was not a happy time and caused some businesses to fold and many to look carefully at their financial situation and make savings. Therefore, because of this, we may have businesses that are more financially self-sufficient and certainly more prudent - to use a much maligned term.
I hope that this is the case and therefore micro businesses are in effect saying, thank you for offering but we won’t be caught out again!!
Colbea Business Advisor