It has been widely stipulated by both the media and many marketing leading economists, that the main thing holding the SME and company formation sector back from full economic recovery, is the lack of available finance.
However, an over reliance on bank loans, overdrafts and credit in general, has been identified as one of the main contributing elements to the current economic situation. This is the conclusion of many business analysts, including the government’s business advisor, Lord Alan Sugar, who stated that small business should ‘stop moaning’ about the lack of available finance and instead scale back thier expectations.
Consequently, in a paper launched last week by the Treasury, the government is seeking advice on the way in which the SME sector is currently financed and asking small businesses on the front line of the credit crunch to give them some ideas of alternative finance options.
John Cassidy, business advisor to the BCC comments; “Historically the process of obtaining finance to fund company formation or the growth of an existing company has been relatively straightforward – you applied for a bank loan. However, as we are all well aware, this process has becoming increasingly difficult during the recession and consequentlymany small business owners have had to adopt a more innovative and strategic approach when attempting to assess the finance options available to their businesses. It’s encouraging to see that the Government is finally seeking feedback from the SME sector; throughout the recession the government has frequently identified the SME sector as a pivotal aspect to the UK’s economic recovery and yet they have – up until now – failed to ask for their opinion on how the situation can improve. This is definitely a step in the right direction.”