Today we are announcing a move to an institution-only funding model for future loans.
Do the election manifestos miss the mark for SMEs?
You can guarantee that when an election is taking place, you’re likely to see a political leader at a local SME. Hard hats, high-vis jackets and eye-protectors are a must for the photo opportunities. Find the local manufacturer or engineering firm and it’s bound to look good in the manifesto.
However, simply donning a hard hat may be good enough for the cameras, but not for SMEs.
The manifestos and specifically business policies are indicative of the current political environment. All the focus is on Brexit or big-ticket items that do not really help business.
Business and trade are nimble, but over the past three years, there has been no debate on what the vision of Brexit is and how and where businesses will play their part. The government’s industrial strategy’s focus looks decades into the future, not for the here and now.
Our concern is that business is simply an afterthought to how government is run.
The truth is that if you want a successful and growing economy, then you need to create an environment that allows SMEs to flourish and in particular the fast growing medium-sized businesses.
We believe that encouraging the funding model that allows SMEs to access patient capital could be transformational to business lending. We have seen first-hand how many SMEs are rejected by banks because of restrictive capital adequacy ratios as well as outdated, inflexible credit models.
Unfortunately many of these declined businesses do not then go on to explore alternative options. Access to finance is key for growth but also for improving productivity and skills. Some good work has been done through the British Business Bank, but we believe it can be expanded even further.
Within the manifestos, there are some policies that are hard not to dislike, for example, tackling late payments, which can be detrimental across supply chains, but what’s evident is that there is no joined up plan for the mid-sized businesses that we support.
The Conservatives for example are willing to get Brexit done, but for businesses there is currently no foreseeable end to Brexit. The forthcoming political debate will focus on the Withdrawal Agreement. There will be no certainty about European trade until we reach a trade agreement with the EU. Whether this can be done in less than a year is another debate.
Labour’s plan to nationalise parts of the economy as well as introduce a four-day week and tax hikes will alarm many businesses. This could be hugely damaging to wealth creating UK businesses. There’s another question as to whether it is achievable, but it only adds further uncertainty for businesses.
SMEs do not want more bureaucracy; they need certainty and confidence to invest.
In conclusion, it’s clear that political parties are keen to publicly court and be seen to support SMEs. Yet, the manifestos are policy-light.
If ThinCats had 10 minutes with any of the party leaders, we would be keen to remind them not to forget the medium-sized businesses too. Many of the issues facing smaller businesses employing less than 10 people are the same as for those employing up to 250. However, let’s not overlook the contribution the latter make in terms of economic value and inward investment into the UK.