A business and financial advisory firm says companies in the South East need to think differently about the places they access finance if they want to grow as the economy recovers
According to figures from the British Bankers Association (BBA), bank lending to SMEs has fallen in 81 per cent of the UK’s postcode areas. The data shows that lending in the South East fell by £652 million, including £63 million in Portsmouth and £87 million in Southampton. However, leading business and financial adviser Grant Thornton UK LLP in Southampton says bank lending is not the only option for SMEs looking to raise finance.
Stephen Mills, Practice Leader for Grant Thornton’s Southampton office, says: “Gone are the days when banks and other funders handed over cash to businesses based on the most speculative of business plans – and most people agree that we’re unlikely to see another lending bubble anytime soon. Data from the British Bankers Association supports this view but this doesn’t necessarily mean it’s all doom and gloom.
“Even in the current environment, sensible businesses with a sensible plan should still manage to access funding for growth. However, to do this successfully companies are finding they need to be better prepared, it’s no longer a simple process and that decisions can be made frustratingly slowly.
“The reality is that there are many alternative types and provides of funding available. Businesses can make sure they are managing their working capital and consider trade or invoice finance to free up cash. Asset finance is still available and tends to be easier to access than cash flow loans. For established businesses there is always the option of raising a minority investment from a smaller private equity firm, most of which say they are struggling to find enough good opportunities to invest in. There is also a varied list of grant funding that some businesses can benefit from as well.”
Among the grant funding Grant Thornton highlights as available to SMEs in the South East is that from The Solent Local Enterprise Partnership (LEP). Its Bridging the Gap fund in Hampshire has a total of £3.7m specifically aimed at helping start up businesses and SMEs to access finance.
Stephen Mills adds that businesses in the region should make use of Growth Accelerator, the government backed programme set up to help ambitious companies to get access to finance and training grants to help them achieve their growth potential. The programme is running free monthly funding clinics in Southampton where businesses can get one-to-one help.
Another programme bringing cash to Solent businesses is the Manufacturing Advisory Service (MAS). Funded by the Department for Business, Innovation and Skills, MAS provides manufacturing businesses with support to help them innovate, plan and grow.
Stephen Mills concludes: “Raising finance can be a real barrier to growth for businesses, particularly for SMEs. What is often frustrating for is that a company can see the opportunities but then struggles to access the cash to fund that growth in the same ways that it used to. Businesses looking for funding need to be smarter and more proactive than they used to be – and they need to have conversations with a wider audience.”
