2013 Autumn Statement: An SME’s Christmas wish list

5^th December 2013

Platform Black's Louise Beaumont puts SME lending at the top of her Autumn Statement wishlist

Lending to SMEs, or rather the lack of it, is one of the biggest impediments to a healthy UK economic recovery. Up until now, the Government has been relying on the methadone treatments of QE and the Funding for Lending Scheme (which, to date, has only served to boost the housing bubble) to keep our low-interest-rate-drug-addled economy going.

So, in the run up to the Autumn Statement, let me put down the key things that all the UK’s SMEs are screaming out for George ‘Santa’ Osborne to deliver.

Top 5 SME Christmas Wishes

Christmas Wish 1 Please ensure that the banks automatically remove their debentures over my business when I have repaid all the money I borrowed. Currently, banks put a debenture over me when providing me with even a small loan, but don’t remove it automatically when it’s repaid. And, if I want an alternative lender to provide finance to me while the bank’s facility is still live, I have to ask the bank to provide a waiver over any debenture that they hold over my business. The process for requesting waivers can be incredibly slow, differs by bank, and often there is no explanation in the event of rejection. There are also punitive break fees if I want to end the contract.

Christmas Wish 2 Please ensure that the banks only take appropriate levels of security over my business. They do like to take ‘all asset’ debentures (which means, basically, everything!), rather than thinking about what an appropriate level of security would be for the size of the loan.

Christmas Wish 3 Please ensure that I get a swift yes or no from the bank when I ask them for an overdraft or a loan. At the moment it can take months – which means I’m left hanging, rather than being able to get on and grow my business, which is what I really want to do.

Christmas Wish 4 Please ensure the banks refer me to alternative finance providers if they decide that they can’t lend to me. If don’t know all the other finance options available to me and I certainly don’t have time to research them all. The banks are in an ideal position to refer me to an alternative if they don’t want to lend to me. If banks do refer, this is usually done via brokers rather than the bank directly referring me to an alternative finance option. Couldn’t the Business Bank mandate a suitable and approved list of alternative finance providers that bank relationship managers would have the authority to refer to?

Christmas Wish 5 Please ensure that big corporates don’t put ‘ban on assignment’ clauses in their contracts. Not only are they telling me when they are going to pay me (which can be 90 days), but by stopping me assigning (selling) my invoices, they are severely limiting my finance options, and, given that SME lending has decreased for the fifth year running, I need every option I can get my hands on.

The sooner we can take the methadone drip out of the UK economy and give the UK’s engine room of growth some support, the happier everyone’s Christmas in 2014 will be.