The lead-up to the General Election on 7 May has had an unprecedented focus on small businesses, with all parties outlining policies designed to support their growth. The parties appear determined to help ‘working Britain,’ particularly the small business owner. But the political parties’ manifestos indicate a worrying ignorance of how SMEs seek financing. They imply that UK SMEs are faced with a simple dichotomy: the big banks on the one hand and emerging peer-to-peer lenders on the other. The reality is very different. UK SMEs have a number of financing options available to them, including thriving independent funders. Bibby Financial Services is one such funder, acting as the lifeline for small businesses during the recession and ensuring their survival. Now Bibby is helping these crucial businesses return to growth.
The political parties seem to believe that more quangos will solve all of SMEs’ problems. But will a Small Business Administration, a Small Business Conciliation Service and a British Investment Bank foster growth in the crucial SME sector? The next Government should focus on making all the options available to SMEs self-evident to business owners and decision-makers, rather than creating more public bodies. Equally the manifestos favour forcing more responsibilities and broader remits onto the British Business Bank. But surely narrowing its remit to the provision of financing for those SMEs that need it most is the most effective route forward.
The main parties have heaped praise on peer-to-peer lenders, with some planning to increase support for crowdfunding and alternative lenders by aligning them with Local Authorities. However, we must not lose sight of the fact that peer-to-peer lenders are risky and untested. The new kids on the block will not herald the salvation of UK SMEs. Nor do they represent a panacea to the market as a whole.
From our customer feedback, many small businesses are nervous about using these platforms and do not trust them. They prefer more personal and local service which can respond to their specific needs. That is why Bibby is expanding our locations and employee numbers to be nearer to our customers.
The next Government must open its eyes to the size and scale of the financing market serving SMEs. Simply ignoring independent funders who sit between banks and peer-to-peer lenders is not an option. We must prioritise educating UK SMEs about all the financing options available to them. Only then will we improve the UK’s productivity and innovation, areas where we are sadly underperforming against our global counterparts.
Thanks for reading
UK CEO, Bibby Financial Services
About David Postings
David Postings is the UK Chief Executive Officer for Bibby Financial Services following his appointment in April 2012. David is an experienced senior executive with over 35 years’ experience in financial services. David has extensive knowledge of the commercial finance landscape.
You can read more about David Postings and his position at Bibby Financial Services in the About Me Section.