Wednesday, 19 December 2012

Confidence creeping up for small firms in the north west

New research from the Federation of Small Businesses shows confidence is creeping up for small businesses in the north west.

According to the FSB’s Voice of Small Business index, firms in the region are displaying cautious optimism heading into the new year, compared to the same period in 2011.

Overall, the index in the north west rose by two points, from -5 in 2011 to -3. This compares favourably with small business confidence in London, which fell significantly from +2 to -12; in Scotland, which increased slightly from -11 to -10; and in the West Midlands, which remained stagnant at -6. Firms in the East Midlands recorded a score of +1, but this was down from +5 in 2011.

Regions with the same level of small business confidence as the north west were the south west (rising from -9 to -3) and Yorkshire (-4 to -3).

Areas with the lowest confidence levels overall also recorded the sharpest year-on-year increase. These were Northern Ireland (-65 to -49) and Wales (-25 to -16).

Small business confidence in the east of England went up from 0 in 2011 to +2, and in the south east the increase was from -2 to 0.

The north east recorded the strongest confidence levels, rising from +4 to +11 year-on-year.

Nationally, confidence in Q4 fell by 1.1 points against Q3 to record a score of -5.6, but it was 18.8 points higher than the same period last year, when the economy entered into double-dip recession.

Overall, fewer small firms applied for finance in Q4, but of those that did a higher proportion were accepted – 49.3%, up from 42.8% in Q3.

The FSB believes this is a move in the right direction, but in total fewer than one in 10 respondents consider credit to be easily available. The FSB wants to see the new business bank improve competition in the sector and promote alternative sources of finance, freeing more businesses to bring forward investment decisions.

Thursday, 13 December 2012

British Government to help fund SMEs through Crowdfunding

In this year’s Budget, the Chancellor announced that the Government was allocating £100 million for investment in ‘non-bank’ channels to help improve the flow of finance to growing businesses.
Today, the Government will announce their plans to join Funding Circle and lend £20 million to businesses directly through our marketplace. This is exciting news and represents the first time a UK Government has directly lent money to growing businesses in this way.
We understand this news represents a significant evolution for Funding Circle and we wanted to share with you how this will work, and the new lending opportunities we believe it will create for all investors.
Why is the Government doing this?
Despite many initiatives to stimulate bank lending over the last few years, net lending to businesses has continued to decline. Whilst bank lending to businesses has deteriorated, Funding Circle has rapidly grown. In two years since we launched, thousands of British people have helped to lend £65 million to more than 1,300 businesses. Last month investors lent £7m to British businesses.
The Government has now recognised the impact that non-bank channels, such as Funding Circle, can play to help ease the flow of finance to businesses.
How will it work?
The Government plans to lend £20 million to British businesses through Funding Circle over the next 12- 24 months. This is subject to parliamentary approval and agreement of legal terms and conditions.
The current proposal is that:
  • The Government will lend on every loan that comes on to the marketplace and fund up to 20% of each loan at the average rate
  • We believe this is the clearest option and enables the Government to fulfil its wishes to participate in every loan whilst having no adverse effect on investors’ bidding experience

Thursday, 6 December 2012

What does the Autumn Statement mean to UK Businesses?

Corporation tax
The Government announced that the main rate of corporation tax will be reduced to 21 % from April 2014. This is an addition to the one per cent reduction already announced. As previously announced, the main rate of corporation tax will reduce to 23 % from 24 % on 1 April 2013, with the Small Profit rate remaining at 20 %

Capital allowances
From 1 January 2013, the Annual Investment Allowance (AIA) will increase ten-fold from £25,000 to £250,000 for two years, in a measure principally designed to encourage and support investment by small- and medium sized businesses in plant and machinery.

Taxation of controlling persons
The Government has decided not to pursue the proposal to tax, at source, those who meet the definition of a ‘controlling person’. It is believed that the new approach adopted by HM Revenue & Customs and the existing measures for tackling IR35 are sufficient to avoid the loss of tax revenue through disguised employment. The legislation will be strengthened to ensure there is no doubt that the rules apply to office holders.

Small Business Rate Relief and property rates
The temporary doubling of the Small Business Rate Relief scheme has been extended until April 2014. It is estimated that over 500,000 businesses will benefit from this extension. Subject to state aid approval, an exemption from empty property rates will be available for 18 months on all newly-built commercial property that are completed between 1 October 2013 and 30 September 2016.

Cash basis of accounting
The Autumn Statement confirmed that the new cash basis for small, unincorporated businesses with receipts of up to £77,000
to calculate their tax will be introduced as planned from April 2013. The use of flat rates to calculate some expenses will also be

Employee share ownership
Following a recent consultation on providing shares to employees in return for giving up employment rights, the Government will go ahead with the proposals, as planned from 6 April 2013. Amendments to the original plans are being considered, which include the first £2,000 of shares received under the new status being free of income tax and national insurance.

Company cars and vans
From 2013/14, there will be further tax increases for some company car drivers as the car fuel benefit charge multiplier will see
another increase from £20,200 to £21,100. The van fuel benefit charge will also increase from £550 to £564.

Funding for business
The Government has announced further support for UK businesses by seeking to improve access to finance. Several schemes
will be established to promote trade and investment, which include a scheme providing up to £1.5 billion of loans for the purchase of UK exports when there is no other suitable finance available. The scheme is intended to provide UK firms with greater confidence to bid for export contracts knowing that finance will be available.

Business Bank
In September 2012, it was announced that the Government would create a Business Bank. This bank will have £1 billion of additional capital to stimulate the private sector market for long-term capital and address structural gaps in the supply of finance to small- and medium-sized companies. It is reported that the Business Bank will be operational from spring 2013, with the institution becoming fully operational in autumn 2014. Further announcements are expected before the end of December 2012.

Business Growth Fund Investment
It has long been considered that banks are not doing enough to help small- and mediumsized enterprises. The £2.5 billion Business Growth Fund (introduced by Barclays, HSBC, Royal Bank of Scotland and Lloyds TSB to invest in small business equity) is budgeting to substantially increase its level of investment to £200 million in 2013.

Start-up loans
The Government will provide £72 million of follow-on funding for start-up loans.

Other business measures
From next year, the Bank Levy will be increased to 0.130 %

Wednesday, 5 December 2012

UK’s small firms optimistic about next year

New research from American Express states that more than half (51%) of the UK’s small business owners expect their firms to grow in the coming 12 months.
A further 37% expect their businesses to stay in the same shape, and only 11% expect their businesses to contract.
The American Express UK Small Business Barometer also states that seven in 10 small business owners are expecting growth to come domestically. Regarding the emerging markets sector, only one in 10 business owners said they would be looking to this region for opportunities.
Attracting new customers and maximising sales will be the key focus for small businesses in the next year, with only 14% focused on cutting budgets to ensure their business is in better financial shape. The vast majority (76%) are relying heavily on word-of-mouth to attract new customers, therefore having a good customer service experience will be key in driving future growth. Just over a quarter (26%) are expecting social media, such as Facebook and Twitter, to help build their new customer base.
Strategy and planning for the future is the area where more than half (56%) of the business owners interviewed wish they could devote more time. However, most admitted that they are operating on a short-term basis, with 38% saying they are only planning six months in advance and a third operating on a week-to-week basis only.
Stacey Sterbenz, director for American Express Small Business Services UK, said:  “While previously the focus might have been on cost-cutting or fixing cashflow issues, it’s encouraging that the majority of small businesses seem to be focused on growth, acquiring new customers and maximising any potential upturn in consumer confidence.
“Our research shows that it is more important than ever for businesses to invest in planning, marketing and customer service. With so many companies relying on word-of-mouth, going that extra mile for customers will be key in gaining a competitive edge and to take advantage of new trading opportunities.”

Monday, 3 December 2012

SMEs are depending on cash reserves to survive the recession

Research undertaken by Aldermore confirms that small and medium-sized businesses are continuing to rely on their cash reserves to see them safely through the recession and finance their future growth.

The research, which was conducted among 300 SMEs throughout the country, confirms that nearly two fifths (38%) are depending on cash reserves to fund their future growth ambitions. Of the remainder, 12% say they will turn to a bank loan, 9% to an overdraft, 10% will use leasing or hire purchase, 7% will use factoring and invoice discounting, and 4% cite funding by a commercial mortgage. Of the business owners surveyed, 8% said they will fund their future growth using their own cash and 10% say they are not planning to finance future growth at the moment.

Damon Walford, managing director of Aldermore Invoice Finance, said: “Given the continuing reluctance of big banks to lend to small businesses, it’s understandable that business owners have been forced to rely on their cash reserves to fund their future growth. But as these reserves become depleted, so business owners will need to consider alternative forms of funding, such as invoice finance and asset finance.”

Aldermore’s findings are supported by data released by International Trade Monitor, which said that a lack of confidence has led more than a fifth of all SMEs to consider alternative sources of funding. It says the top three sources are asset-based finance (44%), factoring (31%) and personal savings (26%).

Damon concluded: “Although SMEs have relied heavily on bank loans and overdrafts in the past, many business owners have realised the vulnerability of having all their eggs in one basket and are now considering diversifying their funding sources. SMEs have more choice than they may realise; it’s worth consulting an accountant or commercial finance adviser to discover just what’s available.”

Tuesday, 20 November 2012

Santander expands trade finance team

Santander Corporate & Commercial Banking is extending its support for businesses looking to expand through international trade, with the appointment of three regional specialists.

Peter Smith, Chris Lynch and Simon Dunn have joined Santander’s trade finance team as product directors for the north west, for Scotland and Northern Ireland, and for the north east and Cumbria respectively. This brings the team up to 18.

Peter has 35 years’ banking experience specialising in trade finance, having previously worked for HSBC and Fortis. Chris has been working in the sector for 15 years in a career that includes roles at Barclays, Lloyds and RBS, and Simon has more than 23 years’ banking experience with Lloyds Banking Group, with hands-on experience working with exporting and importing businesses.

All three will be responsible for developing and growing the business in their respective regions. They will work with local partners to provide the best possible advice and service to businesses with turnovers of up to £50m.

The team is led by Martin Hodges, head of trade finance. He has been actively growing Santander’s trade finance division since its inception in 2009. In the past three years, he has grown the business from a team of two and a handful of customers to a multi-million pound lending specialist supporting hundreds of smaller businesses across the UK.

Martin said:It is great to welcome such experienced team members at such an exciting time for the bank. Over the past few years Santander has been establishing itself as a major supporter of businesses trading overseas, and with this expanded team in place I look forward to extending this support to businesses across the north, Scotland and Northern Ireland.

“A strong regionally-based team enables us to build local knowledge and treat all of our customers on an individual basis, getting to know their businesses and international aspirations so we can put together the best financial solutions to help them meet these aims. Our partnerships with organisations like UK Trade and Investment enable to provide a holistic relationship with our customers, focusing on support and advice over the long- term.”

Thursday, 15 November 2012

Chancellor must pull out all the stops to support business growth

Ahead of the chancellor’s Autumn Statement next month, the British Chambers of Commerce (BCC) has called on the government to take forward targeted measures to boost business growth in the UK. The BCC continues to support the aims of the deficit reduction plan, but believes the government must pull out all the stops to enable British businesses to access new markets, invest and create jobs.
The BCC submission to the chancellor proposes the following:
Measures to promote business growth and exports
  • Implementation of a Growth Voucher scheme. The £100m scheme could give 20,000 businesses with clear growth plans up to £5,000 each to get support to negotiate the planning system, advice on accessing finance or help growing their staff. Businesses applying for the scheme would need a demonstrable business growth plan.
  • Implementation of an Export Voucher scheme. Together with Growth Vouchers, targeted Export Vouchers would build confidence and help to kick-start the rebalancing of the UK economy. Export Vouchers would encourage businesses on the cusp of exporting, or those looking to expand into new markets, to seek out and access the support they need from public or private-sector sources, with minimum bureaucracy.
  • Greater support for UK exporters in overseas markets. The BCC proposes the government spends a further £100m per annum on in-market support for UK exporters in 18 key global markets, linking businesses to new opportunities by adding in-country trade advisers, embedding them with British Chambers overseas and implementing a quality accreditation scheme.
John Longworth, director general of the BCC, said: "The chancellor's Autumn Statement must include tough decisions to prioritise growth without adverse effects on the government's deficit reduction programme. We believe that resources need to be re-prioritised to support business growth, international commerce and the building of houses and infrastructure here at home.
“Our message to the chancellor is clear. Business will lead Britain's economic recovery, but it needs targeted support and a confidence boost from the government. Ministers must be bold and take some unpopular decisions, including a shift of resources from welfare spending towards crucial growth measures. It won’t be easy, but the interests of the nation must be put first so we can ensure a bright future for our children and grandchildren for years to come.
“Firms up and down the country have been looking for ways to grow, export to new markets and take on more staff in the face of weak growth and continued problems in the eurozone. While recent GDP data will give many businesses a confidence boost, the government still has work to do to ensure that our economic recovery is sustainable over the long-term."

Tuesday, 30 October 2012

Bank lending to leasing companies recovering

Bank lending to leasing companies has jumped 17% during the past 18 months, recovering from a slump that began at the start of the recession.

New data from independent finance provider Syscap found that outstanding bank loans to leasing companies stood at £27.2bn in August 2012, up from a 20-year low of £23.2bn in May 2011.

During the same period, bank lending to all businesses fell 5%, from £438.7bn in May 2011 to £417.1bn at the end of August 2012.

Syscap explains that demand for leasing is on the rise, with businesses increasingly turning to leasing rather than using traditional bank loans or overdraft facilities.

Many businesses have expressed their concern that traditional credit facilities, such as overdrafts, can be withdrawn at almost no notice. Even long-term loans can be withdrawn from businesses if the company’s turnover or profitability falls below a level set by the bank. Lease finance, however, stays in place just as long as the business is able to make its payments.

Philip White, CEO of Syscap, said: “Leasing has become the funding source of choice for many solid small businesses, offering a more secure way of funding investment or expansion than traditional bank loans or overdrafts. It is a vital source of funding for businesses that want to invest in new assets such as machinery and IT.

“It’s great to see that banks are responding to this demand by providing more finance to businesses through the leasing sector.”

Monday, 22 October 2012

Unpaid Bills on the increase for SMEs

Unpaid bills to SME businesses are now at the highest level (£35.3 billion) in almost five years, according to Bacs, with combined debts up by almost £2 billion compared to the first half of last year.
Bacs found that the average amount owed to small businesses stood at £45,000 at the end of 2011, up from £39,000 earlier in the year.
Additionally the average company is waiting 29.5 days longer than agreed payment terms to have their invoices settled, and that figure is also up, rising from 28 days reported in the first half of 2011. With large businesses insisting on payment terms of as much as 120 days, many suppliers could be waiting up to five months to be paid for work.
There’s an old saying that ‘a sale is not a sale until it is paid for’. This statement, amplified by the findings of the above research, serve to underline one of the biggest problems for SMEs – getting paid on time.
The quicker you can get paid in the current unforgiving environment, the better your cash flow and your business performance.

Tuesday, 2 October 2012

Islamic Finance

Islamic finance is a market worth over £ 1 trillion and UK banks are keen to break into this marketplace.
Sharia finance is derived from the religious text of the Koran. It follows three basic rules:
·         Devout Muslims must not be involved with markets that are considered sinful, such as gambling, alcohol, tobacco, arms, cinema, pornography or anything to do with pig meat.
·         They must avoid taking risks, such as investing in hedge funds and spread betting
·         It bans the payment of interest. In other words you are not allowed to create money by money. This rule makes it hard to use Western banking products such as loans, mortgages and savings accounts.
Trading and investing for profit is permitted, but on the basis of partnership, in which the risk and profit are shared between two parties. This means that if you put money into accounts in Islamic  banks you do not earn interest but you earn a profit share in the activities of the bank. If you want a loan to buy a car you are not given a loan, the bank buys the car for you at an agreed price.
Buying a house has often been a major problem so one way to achieve this is for the Bank to buy the property and lease it back over a 25 year period, without charging interest and then selling it at an agreed price to the occupier.
You would think that as Sharia banks could not invest in risky loans that they might have escaped the financial crisis, but you have to remember that they did invest, as described above, in property and so they were not immune, but due to their main geographical market areas they were much better off than Western banks.
Western banks are increasingly taking an interest in this market. Citigroup, HSBC, Lloyds, TSB, RBS, Barclays, Bank of Ireland, Standard Life and UBS are all now offering Sharia compliant products.
The Bank of London and the Middle East and the Islamic Bank of Britain offer some of the best rates of return available, but you do not earn interest. Instead they act as your ‘agent’ in making Sharia-compliant investments; they will monitor the deposit to ensure the agreed profit rate is met.
The Islamic Bank of Britain has had a significant impact on the UK and European financial industry.  The Bank was authorised by the UK’s Financial Services Authority in 2004 and is the UK’s only wholly Shariah-compliant retail bank.  The Bank has continued to maintain this position and still remains the only Islamic retail bank in the UK and Europe.  It is considered a pioneer of retail Islamic banking and currently offers the largest range of Shariah-compliant retail financial products to the UK consumer.
The UK was the first member of the EU to authorise Islamic Banks, as a result, according to the CityUK Islamic Finance 2011 report, there are 22 banks in the UK offering Islamic finance products.  This figure exceeds that of any other Western country. There were five Sukuk (Islamic bond) listings at the London Stock Exchange (LSE) in 2010 and one in early 2011.  This brings the aggregate total at the LSE to 31 listings worth $19 billion. Islamic funds managed in the UK have combined assets of $300 million.
Islamic banking is now well established in the UK and is worth considering even if you are not a Muslim but are interested in a more ethical method of banking.

Thursday, 27 September 2012

Business Funding Queries Event: 4th October, Peterborough

Peter Kelly of Pegasus Funding Resources is on the panel of the Business Funding Queries Event in Peterborough on the 4th October. The event is being held between 9:30 and 2:30 at the Kingsgate Conference Centre, 2 Staplee Way, Parnwell, Peterborough, PE1 4YT.

The event is being run by the Greater Cambridge, Greater Peterborough Enterprise Partnership.

For more details contact:

or call 01733 317417

Monday, 24 September 2012


Around 100,000 UK businesses are set to save millions of pounds in administration costs and accountancy fees under proposals announced by the government.
Business secretary Vince Cable has revealed plans to allow more companies to decide whether to have a statutory audit or not to try to reduce auditing and reporting requirements. 
Furthermore, the majority of subsidiary companies will not have to complete a mandatory audit, as long as the parent firm guarantees its liabilities.
Dr Cable said that changes have been prompted by reporting requirements becoming "increasingly demanding and costly over the years.
He added; 
"Tackling these problems will help save UK companies millions every year and free them up to expand and grow their business, which ultimately benefits the entire British economy."
It comes after the Chartered Institute of Taxation found that "larger" small firms are finding it difficult to meet their tax obligations because of the administrative burden they face.

Monday, 17 September 2012

Record Exports

Record exports outside the EU helped to provide a sharp reduction in the UK’s trade deficit. The gap between imports and exports was the narrowest since the beginning of 2011, shrinking to £7.15 billion in July from £10.07 billion in June. Some economists had predicted a £9 billion gap.
Exports of goods surged 9.3% to £25.8 billion will imports shrunk by 2.1%. Oil exports and a decline in oil imports as well as more days worked were contributing factors. Exports to the Eurozone fell to their lowest ever recorded and exports to the rest of the World hit a record high.
This could well be a blip, but with the Eurozone taking a positive step last week in the German courts and better total employment figures and a reduction in unemployment, all be it small may point to a slowly improving economy.

Wednesday, 12 September 2012

NACFB figures: Lending to SMEs increases

New figures from the National Association of Commercial Finance Brokers show that lending to SMEs has continued to increase.

The annual survey of NACFB members found that commercial mortgages rose by 26%, and asset finance increased 100%. Asset finance brokers in particular have seen an increase in activity and lenders. These figures are consistent with growth in NACFB membership within this division during the past 12 months. There has also been growth in short-term lending of more than 40%.

Adam Tyler, chief executive of the NACFB, said: “The increases in invoice finance we had for four consecutive years have now flattened out, and in fact there was a modest decrease.

“Despite many lenders’ protestations that they are lending more than ever, these figures reveal what anecdotal evidence has already shown: that funding for businesses is still hard to access, but it has improved, if you know where to look.”

The NACFB has 83 different commercial lenders that are part of its 1,000-member organisation.

Adam concluded: “About 90% of small businesses bank with the four main high street banks; when it comes to borrowing, SMEs with our guidance are now reaching out to a wider variety of lenders.”

Monday, 3 September 2012

What Government funds are available to SMEs to help growth?

There are a number of funding options that are sponsored by the Government through the Department for Business, Innovation and Skills (BIS).
Enterprise Finance Guarantee Scheme (EFG): The EFGS replaced the successful SFLG Scheme, it is a loan scheme that has been designed for SME’s that meet the criteria, to obtain loans even if they do not have any security to back the loan. The lender is provided with a 75% from the government. 45 approved lenders have signed up to the EFG programme. Be aware, however, that all lending decisions are made by the provider and not the government and many lenders are still asking for personal guarantees from the borrowers even though they have a 75% guarantee from the government. Loans are available from £1,000 to £1,000,000 for SMEs with turnover of less than £45m. It is important to understand that these are not the most popular type of loans with the banks, due to their risky nature.
Export Enterprise Finance Guarantee Scheme (EXEFG): This is like the EFG Scheme but this time it is for exporters who meet the criteria who also lack the security that they would normally need. In this instance the Government provides the provider with a 60% guarantee. Only a few Banks have so far signed up for this scheme. These include HSBC, Barclays, Santander, RBS and Lloyds. These are for short term export loans of between £25,000 and £1,000,000. The SME’s must not have turnover over £25m. At present this scheme is closed to new applicants but it is hoped that it will be re-launched in a simpler form.
Business Angel Co-Investment Fund: This was created from a Regional Growth Fund and it can make investments of between £100,000 to £1m into high growth, early stage SMEs. They particularly like those areas that were hit hard by spending cuts. Their investments sit alongside other investments that have been made by business angels. There are some geographical restrictions and the sum investment must not be more than 49% of the total required.
Enterprise Capital Funds (ECFs):  The ECF Scheme seeks to bridge the equity gap between private investors and what the struggling innovative SME’s actually require to reach their growth potential.
Business Finance Partnership (BFP): The BFP aims to ease the flow of credit to businesses in the UK by helping to diversify the sources of finance available to them. It is part of a £21 billion programme of credit easing measures announced in the Autumn Statement 2011 to support smaller and mid-sized businesses that do not have ready access to capital markets. The Government has already committed to spend £700 million through managed funds that lend directly to mid-sized businesses in the UK.
The BFP will initially invest a sum of £1billion in loans alongside private co-investors. Actual terms have not yet been published but it is believed that SMEs with turnover of less than £500m will be able to apply. This scheme will enable SMEs to access funding through non bank lending channels.
The small business tranche of the BFP will focus on co-investing through non-traditional channels, such as peer-to-peer platforms, supply chain finance and mezzanine finance for businesses with a turnover below £75 million.
Provided turnover is below an average of £75 million over three years, the end recipients of the scheme can be any sort of UK small businesses (partnerships, private companies, employee owned) operating anywhere in the UK and in any sector. BIS will invest up to a maximum of 50 per cent in any fund or channel, on fully commercial terms
For further information go to the Department for Business, Innovation and Skills’ website :

Wednesday, 1 August 2012

Sales Team Restructuring at Lloyds Bank

Lloyds TSB Commercial Finance has restructured its sales team, in a move designed to give customers greater access to senior funding professionals.

Each regional team will have three heads, with respective responsibility for companies with turnovers of up to £15m, £15m-£100m, and £100m+, across a wider geographical remit.

The changes will simplify the bank’s structure, with the aim of creating teams that will focus on facilitating the growth of SMEs, mid-market businesses or large corporations.

The new structure also aims to make the bank’s asset-based finance division work more closely with divisions across the wider banking group, to provide better-suited funding solutions.

Ian Larkin, managing director for Lloyds TSB Commercial Finance, said: “By aligning more closely with the structure of the wider banking teams, we will be able to work with our colleagues in wholesale and commercial banking to determine the most appropriate source of finance to best suit the needs of our customers on an individual basis. This will help us to supplement loans and overdrafts with tailored invoice finance and complementary products.”

Friday, 27 July 2012

SME Confidence edges up

UK businesses are regaining some confidence despite concerns about the eurozone crisis and slow UK growth.

However, firms risk losing out to global competitors if they fail to invest for future development, according to the latest Business in Britain report from Lloyds TSB Commercial.

The twice-yearly report, which canvasses the views of 1,800 UK businesses, shows that confidence has edged up since January despite continuing tough economic challenges.

However, confidence is still not back to levels witnessed in the preceding two years and some firms are holding back from making crucial decisions about their future as a result.

The overall confidence balance is the average of the individual net balances, for sales (19%), orders (20%) and profits (-2%). The current overall business confidence balance is 12, a four-point increase on the balance of eight recorded in January. However, while confidence among businesses has improved since January, the majority of UK businesses are still keeping investment on hold.

David Oldfield, commercial managing director for Lloyds Banking Group, said: “If firms continue to take advantage of profitable opportunities that will maximise their growth potential, we have reasons to be hopeful for the future.”

One in five businesses (20%) believe they will need to cut investment before the end of the year, while nearly half of businesses (47%) state that their investment will stay the same. Only a fifth (18%) plan an increase. The resulting negative balance of -2% is an improvement on January, but shows that businesses are still cautious about committing to investment spending, which could be to the detriment of UK competitiveness.

Expectations for total sales and orders in the next six months have both improved, after falling to their lowest levels in two-and-a-half years in the last survey in January.

More than a third of businesses (34%) said that they expect their orders will increase during the next six months, compared to 14% that think their orders will fall.

Two fifths of businesses stated that they think sales will increase in the next six months, while more than a fifth (21%) expect a decline.

When asked what the greatest threat to their business would be during the next six months, nearly half (49%) of businesses cited weaker UK demand, compared to 60% when asked in the last survey in January.

David continued: “Firms continue to see weaker UK demand as the main threat to their businesses, so it is crucial that they improve their competitiveness on the international stage.

“However, given that UK businesses have not been increasing their investment levels since the drastic cuts at the beginning of the financial crisis, they should be bold and do so now, especially if they want to improve their competitive edge in demanding export markets. Our job is to work closely with businesses to help them take advantage of opportunities for growth.”

Tuesday, 17 July 2012

SMEs lead the fall in business insolvencies

The latest Business Insolvency Index from Experian has shown that during June, 1,650 businesses became insolvent, compared to 1,841 in May and 1,783 in June 2011.

SMEs with one to 100 employees were the only group to see improvements in their insolvency rates, with the biggest rise coming specifically from SMEs with 51 to 100 employees, from 0.19% in June 2011 to 0.12% in June this year.

Businesses with more than 100 employees experienced an increase in the rate of insolvencies compared to June 2011. Firms with between 101 to 500 employees experienced a 0.16% failure rate, compared to 0.08% in June last year, and businesses with more than 500 employees saw an increase in insolvency rate from 0.12% in June 2011 to 0.15% in June this year.

Max Firth, managing director of Experian Business Information Services in the UK and Ireland, said: “Although the overall figures for June show a fairly stable environment at the moment, led by smaller firms, the higher insolvency rate at the top end of the business world will have an impact on the supply chain. Many smaller suppliers, unless they have a good credit management process in place, will find themselves short of a major customer and left with unpaid bills. They will need to move quickly to fill the gap in their customer base.

“When taking on new business, it is vital they start to monitor the health of both customers and suppliers. They can be forewarned of any issues and be in a better position to deal with the impact of another business’s failure.”

Thursday, 12 July 2012

The cost of starting a business

Research from borro’s Enterprise Ladder Report reveals that, on average, micro businesses and SMEs require £94,000 start-up capital to get their business going.
The study also found that since launching their businesses, more than a third of SME owners (38%) have had to invest additional funds from their own savings into the business, and one in 10 have taken out short-term loans in the last 12 months to assist with business cashflow.
Those businesses that have needed to take out a loan have had a higher average start-up cost of £127,992, of which they have borrowed £84,500.
The last five years have seen the nation’s small business owners really struggle to keep their heads above water; 46% of all small business owners have seriously considered either selling their business or closing it down completely, so it is no surprise that business owners have had to take out loans or dip into their own pockets.
Paul Aitken, CEO of borro, commented: “It is a real worry to see that the future outlook and struggle that SMEs are going through is so grim. For those that take the time and effort to start up a business it is only fair that they are rewarded.”

Tuesday, 10 July 2012

Who are the High Street Banks connecting with?

Research commissioned by retail and banking solutions provider Wincor Nixdorf has highlighted a disconnect between consumer preferences and the service being offered by some high street banks.

The study of more than 2,000 consumers looked at attitudes to in-branch technology. It revealed that despite certain technologies such as self-service becoming a staple of branch banking, some customer education is still needed with regards to more innovative services if they are to realise the potential benefits. For example, while the majority of consumers are comfortable using self-service kiosks to take out cash, more than half do not yet feel as comfortable using the machines to pay in. Many consumers also admit they are suspicious of the industry’s intentions in adopting such services. Interestingly, 58% believe that technology innovations such as mobile banking are simply a driver to cut staff numbers and costs, with only 22% believing the aim is to improve service to customers.

Ed Brindley, director of marketing at Wincor Nixdorf, explained: “Technology like cash deposit machines, self-service and mobile can never replace good customer service. Banks know this but the key is to show customers that they are simply tools to improve service. What this study proves is that consumers want to know that whatever technology is being adopted, it is safe and they are using it correctly to ensure it benefits them.

“Consumers want a choice, and if they wish to use self-service, they will. If not, they want to know that staff are on hand to help. Ultimately, they just want good service, and technology can help achieve this but only if the customer feels comfortable using it.”

The study also revealed concern among consumers about the continued boom of mobile banking, with 72% of consumers believing such services to be insecure and unsafe.

Ed added: “When you look at some technology such as the ATM, this has become a retail banking mainstay. Consumers feel comfortable using it and see that it is of benefit. However, the key here is that it was rolled out gradually and consumers were given the right education in how to use it.

“The problem now is that while banks are doing the right thing by innovating to improve service, the speed of technology-adoption has accelerated. If consumers are given the right level of education and help initially, they will soon feel comfortable, see that it is of benefit to them and the concern and distrust this study has identified will no longer be an issue.”

Thursday, 5 July 2012

Santander's new SME intership scheme

Santander UK chief executive Ana Botín has extended the bank’s support for SMEs with the launch of a new programme to place graduates from the country’s top universities on internships with SMEs across the UK.

The programme aims to promote the benefits of working for an SME to third-year or recently graduated students, while also providing smaller businesses with an injection of talent not always easy to obtain by companies with limited administration resources.

Santander will work with its partner universities to find students and companies who will benefit most from the scheme and will help with placement and administration, including project management, as well as part-funding a basic salary for the students.

Ana said: “Youth unemployment, and particularly graduate unemployment, is one of the most pressing issues for the UK economy. We hope our new programme, offering 500 student internships to SMEs, can help our talented graduate community to gain vital experience in the workplace, opening their eyes to the benefits of working for smaller companies.

“SMEs have not typically attempted to compete with the graduate recruitment schemes of the big FTSE players, and we hope that this initiative will give a wider range of companies the benefit of fresh young talent.

“As the engines of progress and invention, universities have an important role to play in incubating the enterprises of tomorrow.”

Friday, 29 June 2012

Financial Services Activity shows strong growth

Financial services business volumes and income both grew strongly in the three months to June, but firms say they are less optimistic about their business situation than in the last quarter.

Of the 108 financial companies that responded to the CBI/PwC survey, 59% saw volumes rise in the quarter to June, and 21% reported a fall. The resulting rounded balance of +39% marks a further acceleration in the rate of growth, as well as being the ninth consecutive quarter of growth. Companies reported that overall levels of business were above normal (+10%), for the first time since June 2007.

The improvement in growth was driven by business with overseas customers (+42%) and financial institutions (+15%). Business with private individuals continued to rise at a similarly solid pace to the previous quarter (+19%), but with industrial and commercial companies it was broadly flat (+3%).

Income also rose strongly, with the increase in income from fees, commissions and premiums (+43%) and net interest, investment and trading (+37%) relative to the previous three months, both beating expectations. Further growth is expected next quarter, but at a slightly slower pace.

At the same time, average spreads widened further during the past three months (+37%), rebounding from a slight weakening in the March survey (+11%).

The combination of strong growth in business volumes and income and a widening of spreads meant that profitability continued to rise solidly (+25%), at a similar pace to the previous quarter (+21%), marking the twelfth consecutive quarter of growth.

But despite strong growth in activity and expectations that this trend will continue, financial services firms overall were less optimistic about their business situation in the three months to June (-13%). This partly reversed the rise in sentiment in the previous quarter (+32%).

Furthermore, in the three months to June, the number of people employed in the financial services sector fell modestly (-7%), against expectations of a rise. However, companies expect to resume hiring during the next three months (+15%).

Firms’ investment intentions for the year ahead have softened compared with the previous quarter. Spending on marketing is expected to remain unchanged (0%) relative to the previous 12 months, and businesses plan to spend less on vehicles, plant and machinery (-18%). While investment on IT is expected to increase (+25%), intentions have weakened relative to the March survey (+47%).

The majority of firms continued to cite uncertainty about demand and business prospects as the factor most likely to limit capital expenditure (48%). The weak level of demand also remained the factor most likely to constrain business expansion (83%).The number of firms citing a shortage of finance as a constraint to investment picked up, continuing the volatility in this data in recent surveys.

Regulatory compliance is once again a key driver of business costs and capital expenditure plans. The number of financial services firms anticipating having to spend more on regulatory compliance over the next 12 months relative to the past year rose to +77%, up from +58% in the last quarter. More firms also highlighted this as a motivation for capital spending in the year ahead (68%, the highest proportion since June 2010). More than half (54%) of respondents said that dealing with statutory legislation and regulation was likely to limit their ability to increase business over the next year.

Ian McCafferty, CBI chief economic adviser, said: “The financial services sector has seen another quarter of robust growth, with business volumes, income and profitability all rising solidly once again.

“However, businesses are less optimistic than in the previous survey, have reduced headcount and are reappraising investment plans. Regulatory compliance is an increasing factor shaping investment, activity and intentions.”

Monday, 18 June 2012

Invoice finance keeps on growing

New quarterly figures from the Asset Based Finance Association have shown that both total funding and turnover from companies using invoice finance remained broadly positive in Q1, with year-on-year growth.

However, UK and Irish firms are still remaining cautious and not accessing all of the funding which is available to them.

Turnover from companies using invoice finance grew 6% in Q1 2012 compared to the same period last year, with total client sales at £59.2bn, up from £55.6bn in Q1 2011. Funding by the ABFA’s members to businesses has also risen 4% year-on-year, with £15.4bn outstanding in advances at the end of March. While this figure is slightly down on the previous quarter’s total advances (by 1.9%), the fall was fully expected with Q1 figures traditionally showing a slight drop and annual growth remaining positive.

This year-on-year growth contrasts noticeably with the rise in available funds, which, at 8%, is double the rise in advances. Total funding available in Q1 2012 stood at £22.9bn, meaning there is a further £7.5bn of finance which companies could be accessing. This guarded approach has continued for more than a year now, with firms steadfastly not accessing all of the funds available to them.

The total number of clients using invoice finance also rose noticeably in Q1, underlying the sector’s growth potential, with a net total of 493 new clients coming on board, pushing total client numbers up to 41,989.

Kate Sharp, chief executive of the ABFA, said: “The new figures show a broadly positive picture, with both total funding and turnover from companies using invoice finance rising year-on-year, plus the number of clients increasing. However, the new figures also show a conservative approach to accessing funds from firms, with their appetite for new investment and maximising growth potential being muted. With the economy back in recession perhaps this is not surprising, but equally it does mean there will probably be missed opportunities.”

Thursday, 7 June 2012

Aldermore Shaking up business banking

Aldermore has launched a series of new products aimed to shake-up the business savings market.
With a one year fixed rate account paying 3.25% AER and a six month fixed rate account at 2.35% AER, the new business accounts can be opened online within 15 minutes.
The accounts are operational as soon as they become live, allowing for deposits to be transferred from other lower paying accounts, with immediate effect.
These product launches come after research by YouGov found that 89% of SMEs feel the interest rate they receive for business savings is unfair, and just 9% of SMEs are satisfied with their business savings accounts. The survey of more than 1,000 small firms also revealed that four in five SMEs think that banks do not make it easy for them to switch accounts.
Phillip Monks, Aldermore’s CEO, said: The new business accounts will flip much of the poor practices on its head, as we are offering great rates and true online access, which is also supported by a UK-based call centre.
“We hope this announcement means we are going to shake-up the British savings market. This step-change for the bank is just the start, as there are other new initiatives which will follow throughout this year.”

Monday, 14 May 2012

Crowd Funding, What is it?

Crowdfunding is an alternative method of raising finance for a business project. Unlike traditional angel investment, in which just a few people typically take a larger share in a business, with crowdfunding an entrepreneur can attract a ‘crowd’ of people, who may not have invested in shares before, each of whom takes a small stake in a business idea, by contributing towards an online funding target.
 Crowdfunding is not new. In 1997 fans underwrote an entire US tour for the British rock group Marillion by pooling their money. The film industry first used Crowdfunding in 2002 and a Trade Association for freelance workers raised £100,000 in 1999.
In the UK there are two main types of crowdfunding:
Equity crowdfunding mainly used for funding start-ups and each investor receives an equity stake in the company and Debt crowdfunding, which is not used for start-ups, the company has to be at least two years old and the money is a loan over 1, 3 or 5 years.
The main benefit of crowdfunding, other than raising much needed capital, is that it creates a strong network of support for your company. The equity model is especially good at creating ambassadors for your brand, promoting it amongst their networks, family and friends and often becoming returning customers themselves.
How does it work? Although the rules differ from site to site, generally an entrepreneur will pitch his/her idea, set a fundraising goal and set a deadline for raising funds. Potential lenders or investors can review the pitches and decide if there are any they would like to support. Many entrepreneurs will also offer incentives to investors in the form of discounts and special offers. If the total required is not raised then the funding does not go ahead.  The procedure for a lending crowdfunding site is not quite the same. On these sites you have to decide what interest rate you want to receive and then you bid for a portion of the loan.
How do I choose which crowdfunding site to use? Here are my six top tips
·         Choose the right site. Do you want equity or debt?
·         Know your target audience and pitch accordingly
·         Plan ahead. A first class business plan is essential, good special offers for the investors are important and make certain you keep the interest going and have news items ready for each week of the investment cycle.
·         Be passionate., include images and think seriously about a video to really get your message across
·         Make certain you explain exactly how the money is going to be spent
·         Do not leave it to the crowdfunding site to find all your investors for you. Leverage all your family and friends and publicise it on all your social networks. No one wants to be first to invest so make certain that a family member invests a small amount right at the beginning and keep the momentum going. It is easy to get investors at the end but difficult to get them at the beginning.
If you are a small start-up with a product that can catch the general public’s imagination then equity crowdfunding may be the simplest and only way you may get your company up and running. If you are an established company but the bank will not lend to you, then debt crowdfunding could be the answer.
Crowdfunding is still only a small part of the fundraising scene in the UK, but it is growing fast and if the banks are not careful they will soon start to see a dent in their customer base. If you need funding then it is certainly worth your while looking into crowdfunding.

Wednesday, 9 May 2012

CPD Training Day: Raising Finance for SMEs 21st June 2012

Do you have cash flow problems? Do you have problems paying your VAT or PAYE? Do you struggle to finance new orders and to buy raw materials? Is your Bank being difficult? Do you want to launch a new product but just do not have the capital you need? Do you need larger premises but cannot get a commercial mortgage? Are you a start-up and need to find investment? Are you paying over the odds for your invoice discounting or factoring? These are just a few problems that demonstrate why you should be continually reviewing your funding needs and why you should attend this CPD training day.
During this Raising Finance for SMEs training day Peter Kelly and Alan Cottle will share their experiences with you .
The course will cover such topics as:
  • The right questions to think about concerning funding issues and what information you need to prepare.
·         The stages of growth that a company goes through and what are the best funding options for each stage.
·         Debt funding and the types available including EFG loans, commercial loans, commercial mortgages, overdrafts and asset finance
·         How to get the best Invoice Discounting or Factoring deal  including special single trade funders and single invoice funders.
·         Trade finance for manufacturing and importers
·         Equity funding including Angels, Venture Trusts and VCs
·         Funding for Companies in distress
·         The common mistakes that everyone makes and how to avoid them.
At the end of the course you will be able to ask the right questions, gather the required information and decide on the best course of action.
The course is open to all including your colleagues and your clients
The cost is only £175 + VAT
Registration is at 9:30 am for a 10am start and the day will finish at 4pm. There is a one hour lunch break and a coffee break in the morning.
The course will be held at the Greetham Valley Hotel Golf and Conference Centre,
Wood Lane, Greetham, Oakham, Rutland LE15 7SN

Telephone: (01780) 460444
To book a place for yourself and for your clients please contact either Peter Kelly, 01932 244810, or Alan Cottle, 01225 782934,
Remember the date: 21st June 2012
Here is some feedback from the previous funding workshops
‘A very informative day, lots of info and answers’
‘An excellent day’
‘A good and valuable day, thank you for your effort’
‘A very helpful course, met my aim of becoming more knowledgeable in my first funding conversation with clients’
‘I learned valuable knowledge that I can use when raising finance...... I expect to be in touch with you frequently.’
‘Clear and practical description and advice, definitely people I could work with’
‘Really useful day, invaluable’