Next Government must recognise the full range of financing options for UK SMEs

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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

David Postings

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.

Welsh development bank hoped to ease funding crisis

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In Wales this week, the BBC reported that a development bank for businesses had been recommended to help the Welsh economy continue to grow. Dylan Jones-Evans, professor of entrepreneurship at the University of the West of England in Bristol produced a report which concluded that a development bank would ease what he described as a ‘market failure’ in available finance.

One of Professor Dylan Jones-Evans previous reports found that there was a gap of £500m a year between what businesses want to borrow and what banks are willing to lend.

Finance Wales

The call for this sort of financial institution in Wales could spell the end for the arms-length body, Finance Wales, which is a subsidiary of the Welsh government. Professor Jones-Evans’s other reports have raised valid questions about how well Finance Wales is doing in its remit to support businesses and help grow the Welsh economy.

Finance Wales has helped many businesses, but it has been widely criticised for the interest rates that have been charged. Figures recently revealed that investments in firms from Finance Wales’ main European fund had only resulted in 20% of the jobs they were expected to create in Wales.

Critical of the proposals

Some people have expressed criticism of the proposals the involvement of the Welsh government in the decision making process rather than Finance Wales who as an arms-length organisation are separated from ministers.

At the present time, business owners in Wales can access loans from the UK government, Finance Wales and the Welsh government. The idea for a development bank would be to bring all loans, development grants and business advice together in one place.

Lending available

I’d encourage Welsh business owners caught up in the ‘market failure’ to provide funding, to look at other avenues of lending available including invoice finance which my team here at Bibby Financial Services specialise in.

Invoice finance provides cashflow solutions for business owners by releasing value tied-up in outstanding customer invoices. This form of finance, combined with the expertise of those who offer it, could be a life line for Welsh business owners trapped in the current stalemate.

Check back for more updates on this subject.

David Postings

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.

 

The economy in 2015

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It’s evident that many businesses have seen improving conditions throughout the past year, but growth is likely to slow over the course of the coming months as we approach the general election in May. Once the election is over it is likely that taxes will rise, taking cash out of people’s pockets and again delaying the need for rate rises.

There is, however, some good news on the horizon for the UK in the form of a growing number of businesses in the country. The number of new start-ups hit a record high last year and by the end of October, nearly 500,000 new businesses had been incorporated since the start of the year – 63,000 more than the same period in 2013.

This is great news for the country and if these businesses are supported in the right way, they could help to provide long-term economic growth by stimulating supply chains and creating jobs.

Funding support

Access to finance is a vital part of this support and, as we start another year, I’d like to share a success story with readers of this blog.

Thanks to a trade finance and invoice discounting deal from my team at Bibby Financial Services, Edinburgh-based, R&G International, is targeting turnover of £30m in the next three years.

Established in 2001, the business imports men’s, women’s and children’s clothing from Hong Kong and supplies them to leading UK retailers including George at Asda.

The £5m deal was secured on the back of a strategic business review undertaken with accountancy and advisory firm Grant Thornton.

In December, this success story was picked up by national Scottish newspaper, The Scotsman and you can read the article here.

Developments at Bibby Financial Services

As Chief Executive Officer for Bibby Financial Services, I’m delighted that we’re able to continue to support these ambitious and growing businesses.

Our expanding product portfolio enables us to support more and more of these businesses and in 2015 we will be announcing further launches.

These product developments will help us to support the growth of even more businesses and I look forward to sharing news of these launches in due course.

Thanks again for reading.

David Postings

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.

 

Client case studies

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2014 has been an excellent year for my teams. We have expanded our Lease Finance capabilities, opened two new offices and introduced a new operating platform to help us to better service our customers. Our client-life has extended by 10%, which is a fantastic achievement and goes some way to demonstrating the long-term value of the customer service we offer.

In what’s been a successful year for my teams across the country, it’s encouraging to see our clients thriving too and in my final blogpost of the year, I’d like to point readers to the Bibby Financial Services blog, where you’ll be able to find a selection of case studies for our clients.

These case studies demonstrate how our funding support and expertise help businesses of all sizes find efficiencies, grow and move into new markets to take advantage of opportunities presented.

Supporting growth

There were three case studies in particular which stood out for me. Edinburgh based wholesaler R&G International Trading is set to double its turnover and reach £30 million in the next three years thanks to a £5 million strong trade, stock and invoice discounting finance facility provided by our Trade Finance team. The deal was secured on the back of a strategic business review undertaken with accountancy and advisory firm Grant Thornton. Details of our funding were published in The Scotsman on 21 December and I’m delighted that we are able to support such an ambitious and growing business.

Another case study I found interesting was that of Birmingham based Nelson Recruitment, which has tripled its monthly turnover since late 2013. Managing Director, Paul Nelson, appeared on BBC Midlands today in October to discuss the findings of our ‘Building Future Growth’ report findings.

Paul and his team recruit staff from across the Midlands for the industrial, engineering, logistics and manufacturing sectors, with around 80 per cent of work based on placing temporary staff and 20 per cent permanent staff.

The business projected its first year turnover at £2m, which is a fantastic achievement and it’s also great that we’re able to support SMEs that are providing jobs in local communities.

I was also encouraged to read about Canterbury-based recruitment agency, Central European Staffing. The business specialises in recruiting pipefitters and other highly qualified tradesmen for the engineering construction industry, including staffing for building or refurbishing power plants, oil and gas installations and offshore platforms. With funding from Bibby Financial Services the business was able to take-on its biggest project ever to supply staff, helping to build a new oil and gas plant seen as a key part of the world’s energy resource over the next 50 years.

I enjoy hearing success stories like these from our client-base, and as we approach the start of 2015, I’m pleased to say that we are positioned to support more businesses grow in the New Year.

Thanks for reading and have a great Christmas and New Year.

David Postings

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. You can read more about David Postings and his position at Bibby Financial Services in the About Me Section.

David Postings looks at Bibby Financial Services reports and studies

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My team at Bibby Financial Services continuously monitor the market to enable us to better service our customers. We often use the market insight gathered to produce regional or sectorial reports and our latest two reports are available on this blog.

SME Sentiment Scotland

I’ve blogged before about funding Scotland’s thriving SME sector, and prior to September’s referendum my team produced the SME Sentiment Scotland report, which was a look at the country’s small and medium sized enterprise sector.

The report was based on research conducted among 500 businesses and includes a look at typical business profiles, sources of business advice and growth expectations.

Building growth on a heritage of excellence

The publication of our West Midlands report coincided with the official opening of Bibby Financial Services’ West Midlands Business Centre and – again – I’ve written before about the thriving local economy in this region.

It’s now widely recognised that the West Midlands is a great place to do business and – developing beyond our strong industrial heritage – over recent years the region’s central location and supporting infrastructure links to the rest of the UK and further afield, have put it firmly on the map as an area of inward investment.

Livelihood businesses in the UK

Also available on my blog is our report based on microbusinesses in the UK. This was based on research we conducted among smaller businesses and we found that more than a quarter (26 per cent) would close their business at retirement, rather than selling it or passing it on to a family member. In fact, findings were picked-up by The Telegraph, where some of my comments on the report were also published.

I’ll continue to host the latest studies carried out by my team at Bibby Financial Services on this blog so check-back in future if they’re of interest.

Alternatively, if you have any questions or feedback on our reports or suggestions on topics for future studies, feel free to get in touch with my team at: www.bibbyfinancialservices.co.uk.

Thanks again for reading.

David Postings

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. You can read more about David Postings and his position at Bibby Financial Services in the About Me Section.