Over the last couple of weeks I have spoken to three business owners who want to raise cash in order to grow their businesses.
Between them their growth plans would see them employ 10 more people and invest around £250,000 in new equipment.
After approaching their respective banks all were left feeling demoralised. This is unfortunately a common feeling as banks don’t seem to want to speculatively fund the growth of their customers. On more than one occasion clients have been told to come back in six to nine months when they can demonstrate their plan works and they are achieving their budgets.
Chicken and egg…
I get really frustrated when I hear this. I appreciate that banks are not equity funders but they should be funding working capital and considering situations where companies are in a growth phase.
Balance sheets of these businesses are weak, wearing the scars of a double dip recession and owners have more often than not sacrificed all of their own assets because thy are passionate about what they do and their business.
So on hearing the Chancellor announce this was a budget for growth my clients and I were waiting for how the Government we’re going to increase funding into the SME sector.
Unfortunately after listening for an hour I was left disappointed that there were no firm commitments to increase the amount of funding made available to SME’s.
We did hear more about growth vouchers, up to £5,000 of support for growing businesses to access support and professional advice however, I don’t as yet know much about them!
So where from here?
Well I’ll be sitting down with my clients reviewing their cash flows and identifying sources of funding suitable for their needs and concentrating heavily on the support peer to peer lenders can provide.