By Steve Pateman
Head of UK Corporate and Commercial Banking
The recent unveiling of the British Bankers Association-led Business Finance Taskforce is an example of our (and the wider sector’s) determination to help SMEs (Small and Medium Enterprises) grow and thrive in difficult times. The taskforce involves Santander and five of our banking counterparts coming together to develop a range of initiatives designed to improve access to funding for SMEs, as well as to create an environment where SMEs can be better informed on the options they have for funding and developing their business. These initiatives include the development of a network of business mentors, establishing clear lending principles and appeal mechanisms, discussion of refinancing options twelve months before any loan comes to an end and improvements to the Enterprise Finance Guarantee scheme particularly around trade finance.
One of the key initiatives is the development of an Equity Fund which could grow over ten years to £1.5 billion, providing growth capital to businesses that have sales of between £10 million and £100 million; a market gap identified in the Rowlands Report. Perhaps there is a limited market for such support and there has been a mixed reception to this initiative.
I don't believe that supporting SMEs should be purely about numbers or commitments; it needs to be about actions. The concept of establishing a Fund to provide equity support does represent a fundamental change in the way that the banking industry supports SMEs in the UK and to my mind, a foundation upon which we can build as the economy starts to recover and we see the re-balancing between public and private sector investment.
Helping businesses through this recovery is a key responsibility of the banking sector in any economy and whilst historic leverage levels in the UK make this challenging, it is important that we find ways to not only fund growth but also sustain existing businesses that are making a real contribution to our economy. Such support has to be based on a real understanding of the business rather than just the numbers that the business produces and that's very much at the heart of how we do business at Santander.
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