Small Business Saturday Blog

Five reasons to be optimistic about access to finance in 2018

Thursday, November 09 at 12:23

SMEs continue to face major challenges when it comes to managing their cash flow and accessing new forms of finance. Indeed, for many, the range of finance products out there can seem bewilderingly complex – and just having a handle on the latest information can prevent some SMEs from taking advantage of these opportunities.  Added to this, an uncertain economic environment may make some small firms wary of exploring what’s available.

However, there are a number of recent developments to UK finance markets that should make it easier for SMEs to manage their money and identify new opportunities to help grow their business in 2018.

1)     Launch of the Small Business Commissioner ready for the start of 2018

A third of payments to small businesses are late, which can cause significant cash flow difficulties and even insolvency for some small firms. Therefore in October 2017 the Government announced the appointment of the UK’s first ever Small Business Commissioner, Paul Uppal, who will lead an independent office tasked with tackling some of these problems and supporting those SMEs facing disputes with larger firms over poor payment practices. The Commissioner’s office will be fully operational from the start of next year.   

2)     Business Finance Guide goes digital

Launched by the British Business Bank in 2014 and supported by ACCA, the Business Finance Guide provides free information about relevant finance options at every stage of an SME’s business journey. The resource also helps small firms understand about the range of alternative finance solutions available to small firms, depending on their size and circumstances. The free guide is available here: https://thebusinessfinanceguide.co.uk/ 

3)     Open Banking revolution begins

In 2016 the Competition and Markets Authority (CMA), an independent regulator, concluded that a lack of competition was leading to SMEs paying too much for banking products and services as well as being prevented from taking advantage of new innovative technologies.

The CMA subsequently announced the launch of the Open Banking initiative, which should help SMEs to shop around for their banking more easily. This should help level the playing field between the UK’s ‘big six’ banks and the rest of the UK’s SME lenders, leading to a fairer, more competitive market for everyone. Further information is available here: https://www.openbanking.org.uk/. 

4)     Finance Referrals platforms give you another chance to borrow

Small businesses who have been unsuccessful in lending applications can now take advantage of a Government mandated referral scheme. SMEs now have the right to be referred to three designated online finance platforms where a large number of different finance options are made available. Launched earlier this year, these platforms will be further developed in 2018, and should help more SMEs to access the finance they need to grow.

5)     New funding available for SMEs in the Midlands and Northern England

This year’s launch of both the Midlands Engine and the Northern Powerhouse investment funds were major blueprints highlighted in the Government’s Industrial Strategy, which contained a central pledge to rebalance finance markets for small firms away from just London and the South East. Both funds will look to expand the finance available to local SMEs in 2018, and in particular, simplify the process for obtaining funding for new start-ups. More information is available here https://northernpowerhouse.gov.uk/ and https://www.midlandsengine.org/.

Ben Baruch

Head of SME Policy, ACCA