By Francesca James
Results from an independent study undertaken by The Open University show strong support for the proposed Business Bank from small & medium sized enterprises, with almost half of respondents expecting it to help them to invest in their businesses.
The Finance and Leasing Association (FLA) sponsored the special topic question which led to these findings.
Over 1,000 SMEs were asked, “Do SME owners and managers think that the proposed ‘British Business Bank’ is likely to help firms in their industry sector to increase levels of investment in their businesses?
48% expressed positive sentiments about the proposed Bank, compared to 30% who said they didn’t feel the Bank would be likely to help their industry and 22% who were unsure. This high level of support was also seen across firms of different sizes.
The FLA also sponsored a further question, “What do SME owners and managers see as the key priorities for the proposed ‘British Business Bank’ if it is to benefit small and medium-sized firms?”
64% of SMEs feel that adequate access to finance during economic downturns is a key priority, followed closely by access to longer-term finance such as ten year loans (60%) and Government support so that commercial providers can lend more easily or more cheaply (59%).
Julian Rose, Head of Asset Finance at the Finance & Leasing Association said,
“The Open University research shows clearly that SMEs want the Government’s new Business Bank to help them invest in their businesses. With this in mind, the FLA has suggested that the Business Bank should include a scheme specifically aimed at boosting investment by businesses in new equipment, with the support of the UK’s equipment finance industry.”
Businesses that don’t wish to use their own capital to invest are very likely to choose asset finance. It is simple, easy to obtain (because the finance company has the security of the asset) and certain (it can’t be withdrawn for the term). Where it has been included in existing Government schemes, e.g. the Regional Growth Fund, it is proving to be a fast and efficient way of getting support to SMEs.
Rose added, “The Business Bank should promote a high-profile small business equipment investment scheme. This would help businesses to obtain new equipment at lower cost and with less need for additional security.”