I know that the headline sounds a bit drastic, but it is true. Lets paint the real picture,no spin, no gloss just facts. Lending to SME’s is very tight, but lets look at the whole picture.
The great saviour was to be peer to peer lending and crowd funding, the new way, for a bright tomorrow. In reality, the amount lent to SME’s was relatively small, but attracted great publicity. This came from the media and other sources. But even at the start, there were exclusions, such as you had to have two years audited accounts for many of the peer to peer lenders . In the real world we all know that it takes at least 6 months from year-end to have your accounts out, even if your accountant was Superman. So effectively, no lending for business under at least two and a half years trading. Peer to peer lending to new starts, almost no chance!
Now the FCA are looking at such firms, with regulations concerning investment advice, only for high net worth individuals, and certification of a maximum of 10% of their net investible assets in unlisted equity and debt securities. This will affect the amount available to SME’s and other business from these lending platforms. So the funding gap won’t be coming from this source.
Lets now just look at the Department of Business , Innovation and Skills, in their last report, it states that it has become more difficult for SME’s to obtain bank finance following the 2008- 2009 financial problems. This lending drought is still here, conditions on loans and overdrafts have many onerous conditions, that has put off SME’s looking to expand, and that is why the recovery is very patchy. It might well be strong in the M25 area, but outside, the response that we receive is that it is still very hard for SME’s in most sectors.
So where do we go from here, well, there is nothing new under the sun, and the often forgotten form of funding available to SME’s is leasing or HP. Not quite as glamorous as crowd funding, not so chic as peer to peer lending, but crucially it is available to all SME’s new starts, established companies, and in all sectors of business. You can even arrange refinance or sale and lease back to release valuable working capital back into your business.
It is time that leasing came out of the shadows, came out into the market place and shouted loud and clear, funding for SME’s , new starts, welcome, come and talk to Oak , real people in the real world.