Hilton-Baird: Autumn statement comment

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The Office for Budget Responsibility’s downward revision of the UK’s economic growth forecast has made it even more important that George Osborne’s initiatives help UK businesses access the funding they require.

As expected, the introduction of a £40bn credit easing programme was confirmed to underwrite bank loans to small businesses under the National Loan Guarantee Scheme.

Whilst encouraging, given that it is hoped to reduce the cost of borrowing by around 1%, our concern is whether this will address the more pertinent issue of access to finance for small and medium-sized enterprises (SMEs).

The key question is whether any such measure will alter the banks’ strict lending frameworks given Basel III and capital efficiency requirements, and if so, how long will it take to implement?

On the other hand, we are pleased to see the Seed Enterprise Investment Scheme to encourage budding entrepreneurs to set up new businesses, as well as the new £1bn business finance partnership for medium-sized businesses.

Of perhaps greater significance is the extension of the Enterprise Finance Guarantee, which will now make firms with a turnover of up to £44m eligible to apply for funding of between £1,000 and £1m under the scheme.

An additional facility we would like to highlight invoice finance, which remains a fantastic solution that helps sustain a business’ cash flow in all circumstances.

Its availability and flexibility, are absolutely vital to any business and this will be especially true in the coming months as UK businesses prepare for the challenging Christmas and post-Christmas period, when cash demand typically increases and widespread late payment becomes even more of a challenge.

Posted on 1st December 2011 by Alex Cardno

 

 

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