UK SMEs
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Majority of Europe’s SMEs relying on loans due to slow or missing payments

Europe’s small and medium enterprises (SMEs) are suffering from significant payment issues, but lack a thorough understanding of the processes involved, new research from Banking-as-a-Service (BaaS) provider Vodeno has revealed.

The company commissioned an independent survey among 2,004 senior decision-makers in SMEs across the UK (504), Belgium (500), France (500) and the Netherlands (500). It found that just 37% of respondents understand what a payment rail is and how it works.

Only 10% of SMEs said that payments are processed instantly, while 11% said that the process happens within the hour. Most commonly, (35%) international payments take between two and three days to reach SMEs, with 11% waiting between four and six days, and 4% waiting between one and two weeks.

The long processing times for payments is causing major problems.

More than half (52%) of the SMEs surveyed have failed to meet commitments due to slow payment processing, while even more (54%) have been forced to take out a loan as a result of missing payments that caused a disruption to cash flow.

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According to Vodeno’s research, the majority (62%) reported that delayed and unpredictable cashflow is the biggest challenge their business currently faces. The same number (62%) said that costly foreign exchange rate fluctuations contribute to a significant drain on their resources.

Looking ahead, the vast majority (68%) intend to adopt real-time payment processing capabilities in the next 12 months, with 62% saying their SME must urgently modernise its payment processing capabilities.

Tom Bentley, CCO of Vodeno, said: “Long settlement times, delayed transactions and a lack of transparency in the payments space can cause headaches for businesses – particularly small and medium enterprises (SMEs) who typically have fewer reserves to draw upon when disruptions occur. Our research shows that these organisations rank missing payments amongst their most significant challenges, with many taking drastic measures to stay afloat.

“In the current macroeconomic climate, cash flow can mean the difference between survival and insolvency, and unpredictable payment processing is the single biggest disruption to business operations. Banking-as-a-Service (BaaS) offers new innovations, better solutions, and the ability to make real-time payments a reality for more businesses.

“At Vodeno, our technology automatically identifies the most appropriate payment rail for any given transaction, offering the most cost effective and fastest settlement to our clients.”

By Paul Skeldon

Source: Internet Retailing

Unsecured Business Loan
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Six things you must know before applying for a loan

In the old days, family and friends were the primary sources of financial aid, even if approaching them seemed overwhelming. Banks, online lenders, and loan apps have replaced the traditional method.

People apply for loans due to several reasons. It is for emergency cash assistance for car repairs or medical bills, debt consolidation, or educational purposes.

With soaring higher education costs, applying for a loan is a feasible option to cover the expenses. Although a student loan is the way to go, getting a personal loan covers additional costs like rent, textbooks, and training programs.

Sometimes, borrowers land in hot waters by accumulating several loans. A personal loan solves the problem by consolidating every loan into a single debt with a fixed interest rate. Getting a loan starts with banks or online lenders providing every necessary detail.

After the loan is approved, funding is provided on the same day or within a few days. Before applying, you must understand the types of loans to avoid issues.

There are several types, from personal mortgages to small business loans, each with a specific purpose. Apart from choosing a particular loan, you must understand a few things before taking the matter to the bank.

For instance, banks in New Zealand are thorough in identifying scams and uncovering bad credit history. Therefore, an individual must have an excellent credit history to acquire a personal loan.

Some quick personal loans by Nectar offer a reasonable interest rate, especially for those with a strong credit history. With that said, let’s discuss the credit history and other factors you must be aware of when applying for a loan.

Credit Score
Getting a loan starts with going through the credit history. A solid credit history saves money, helping you eliminate financial woes. Borrowing money has perks like interest rates directly related to the credit score.

A good credit score makes you eligible to receive the best interest rates. A low-interest rate helps get rid of the debt in a short period.

Compared to the poor credit history that only gets you rejections from banks, a good credit score offers a higher chance of getting loan approval. Apart from that, you also have the leverage to negotiate for lower interest rates.

Banks lend money to trustworthy people who value timelines. Depending on your income and credit score, there is a specific limit to how much you can borrow. Although some with bad credit history might get loan approval, there are a few system-imposed restrictions.

Besides loan approvals, having a good credit history allows access to various rewards. One of those rewards includes getting the best introductory offers. On average, applicants must have a score somewhere between 500 and 700.

Debt-to-Income Ratio
Before issuing a loan, financial organizations evaluate your budget and creditworthiness by using the debt-to-income ratio. The process ensures these organizations that you will pay off your debts on time.

The ratio expresses the borrower’s portion of income that goes into monthly debt service and is calculated in percentage. Debt-to-income ratios are of two types front and back end. The front end measures the cost regarding income.

The front-end ratio is calculated by dividing the monthly mortgage payment, private mortgage insurance, and home loans by gross monthly income.

Compared to the front, the back-end ratio is a comprehensive calculation that includes debt obligations like a credit card. What makes a good debt-to-income ratio is the type of loan you are looking for. Depending on the lender, a higher or lower cut-off is offered.

Application Process
The primary step of borrowing money from lenders starts with filling out the application form. You are requested to provide all the necessary documents depending on your loan type. Documents include financial statements for the recent and the previous years.

Some lenders initially start the process with a credit check. After providing the documents, the next step is loan underwriting. You work directly with an underwriter who verifies the credibility of the submitted documents. These professionals thoroughly analyze the cash flow and other pertinent financial information.

An underwriter guides you throughout the process by understanding the current circumstances and future goals. Once the loan is approved, the final phase of the application process is the loan closing.

A loan closing specialist signs the required documents, including the Note, Deeds of Trust, and security agreement. After doing so, the funds are distributed, and signed copies of the documents are given to the lender and applicant.

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Down Payment
While purchasing a loan, you pay a portion of the price, known as the down payment. The amount depends on the amount you are willing to pay. Some believe the more extensive the down payment, the better, while others prefer making a small payment.

The benefit of the bigger down payment is that it minimizes the loan amount with low-interest rates. With large down payments, you are less likely to suffer financially during tough times. You are more likely to establish a significant amount of equity with large down payments.

One of the primary reasons people prefer a small down payment is that there is no limitation on the amount needed. Small down payments are beneficial for saving money for emergency reserves or fulfilling other financial priorities.

When buying a home, the deposit fee must be 20% of the home’s value. Those interested in investing in residential properties must pay the deposit fee of 40% unless the particular property of interest meets the exemption criteria. Your application is reviewed before approval if the fee is less than 20%.

Interest Rates
Before applying for a loan, understand the interest rate and why it matters. In layman’s terms, the interest rate is the price you pay for borrowing money. The general rule of thumb is when paying back the original borrowed amount, you back a specific loan amount in percentage as interest.

A few exceptions, like monthly full credit card balance payments, exempt borrowers from paying interest rates. People with a solid credit history are at an advantage of receiving favorable interest rates.

The interest rate borrowers pay depends on the duration of the loan and whether the rate is fixed or subjected to change. Several factors are crucial to determining interest rates. These include credit history, income, credit reports, and the loan timeline.

Loan Tenure
The time given to repay the loan depends on a few things. The first step is to analyze your finances and your monthly income. Subtract the monthly financial commitment from your income to determine the amount you can pay for the loan EMI.

The amount calculated is directly related to the loan tenure. With larger amounts, you need more time to pay interest. Along with the loan, also calculate the interest rate the lender charges.

You can also pay off your loan even before the tenure is complete. However, keep in mind the pre-payment penalty you pay to the lender. It would be best to weigh your options and only consider the pre-payment option when you have sufficient funds.

Conclusion
Financial crises can descend upon you at any time. While many set-aside funds for challenging times, some need financial help. In such circumstances, applying for a loan is the most feasible option.

Several reasons contribute to loan consideration, from medical expenses to home renovation and relocation. Those who want to seek a loan must understand the nitty gritty. First and foremost, decide the type of loan you wish to apply for because each type is specific to your financial needs.

After doing so, understand the debt-to-income ratio, down payments, and the documents required to fill out the application form.

Source: Financial Investor

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Businesses are concerned that government support for the energy crisis might not come quickly enough

Small and medium-sized businesses should be proactive about finding novel ways to reduce energy consumption through the winter months and avoid relying on a Government-backed support package, according to tax and business advisers at accountancy firm, Menzies LLP.

With a new prime minister due to be announced on Monday, many businesses are concerned that any steps the new Government might wish to take to soften the impact of rising energy costs might not come quickly enough.

Richard Godmon, tax partner at accountancy firm, Menzies LLP, said, “Businesses are hoping for a just-in-time business support package, similar to that provided during the Covid-19 pandemic, but it is by no means certain that this is deliverable in the time frame needed to keep them trading through the final quarter of 2022.

“We are advising businesses to look for ways to reduce their energy consumption with immediate effect by examining their operating model and considering how it might be changed. Hospitality and leisure businesses could restrict opening hours and some have been considered adopting a three-day week.

“Office-based businesses may be able to alter shift patterns to optimise use of daylight hours or fast forward renovations to improve energy efficiency by introducing LED lighting or switching to equipment that has a low power standby feature. Importantly, some of these renovations could also qualify for enhanced tax relief.

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“Businesses need to think laterally about how they could adapt their working environment and practices to cut their energy consumption from the start of October.”

SMEs will be hoping that the new Government acts quickly to introduce a Covid-style support package. Ideally, this should include grants and interest free business loans, payable over a long term. The reintroduction of deferred tax payments and business rates exemptions would also provide practical help to businesses, helping them to manage cashflow.

However, businesses can’t rely on more tax breaks, as Richard Godmon explained, “While a temporary reduction in VAT would certainly help to boost margins and alleviate cashflow pressures, the Treasury will want to protect tax revenues as far as possible to meet the cost of other support measures.

“The same applies to the recently introduced Health and Social Care Levy, which increased the National Insurance Contributions payable by employers by 1.25 percent – this is likely to be viewed as a post-pandemic revenue generator.

“In the short term, businesses should expect more support in the form of Government-backed grants and loans, but more significant tax breaks are unlikely.”

Advice for small businesses that are finding it difficult to pay their energy bills is available on Ofgem’s website here.

The new Government is expected to announce an emergency Budget to take place later this month and further fiscal measures could be announced then.

Source: London Loves Business

UK SMEs
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SNP write to UK Chancellor Nadhim Zahawi for business support package during energy crisis

The SNP has called on the UK Chancellor to bring in targeted support to assist the hospitality sector through the cost of living crisis.

In a letter to Nadhim Zahawi, Douglas Chapman MP, SNP Small Business spokesperson, warned that without additional UK government support businesses could be crippled under increasing energy costs and lack of trade induced by rising pressures on household incomes.

Mr Chapman has called on the Chancellor to reintroduce the 12.5 per cent rate of VAT for leisure and hospitality businesses, take steps to restrict energy price rises from increasing further and encourage UK workers to take up roles in the hospitality sector to fill vacant posts.

Regulator Ofgem warned the Government on Friday the government must act urgently to “match the scale of the crisis we have before us” as Britain faced the news that the average household’s yearly bill will rise from £1,971 to £3,549.

The Scottish Chambers of Commerce had pleaded for support for businesses in the build-up to the energy price cap announcement, calling on the Scottish Government to provide a relief package similar to that delivered during the Covid-19 pandemic, and to ensure the non-domestic rates (NDR) revaluation goes ahead as planned next year.

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Mr Chapman said: “The resilience our hospitality sector displayed throughout the pandemic was remarkable, but it would have been nigh-on impossible without the significant government support that was delivered by both the Scottish and UK governments.

“If we’re to ensure the survival of the hospitality businesses we know and love, safeguarding jobs and livelihoods in the process, then we must see the UK government adopt a similar approach and response to this Tory-made cost of living crisis.

So far they’ve done nothing to help businesses who are set to be shafted by rises to energy bills that will see firms paying 400% more for gas and electricity, and have done nothing to prevent a loss of trade from the hit households are taking to their incomes.

“Failure to act will result in a decades-long legacy of businesses in ruin, sky-rocketing unemployment, and barren high streets and towns.

“This is largely a crisis of the UK government’s own making – it’s time now they step up to the plate and offer the support that’s needed.

“If they won’t do that it’ll go to show, once again, why only with the full powers of independence can we fully support our treasured hospitality sector and the people upon whose income it depends.”

In an interview with the Daily Telegraph, Mr Zahawi said he is weighing up potential action to help small firms including the Covid-style cuts to VAT and business rates to support the hospitality and leisure sectors.

Mr Zahawi said a failure to help small and medium enterprises may potentially lead to a “longer-term scarring effect on the economy”.

He said: “So what we did on business rates, what we did on VAT for particular sectors like hospitality. So we’re working up all those options to look at those.

“And of course Liz Truss has talked about removing a moratorium on the green levies for a couple of years. We’re looking at that as well, which will help everyone with about £150.”

Tracy Black, CBI Scotland director, told BBC’s Sunday Show both governments need to step in to prevent businesses from closing and to encourage economic growth.

Ms Black said: “Raw materials have become more expensive, freight costs are more expensive so there’s real pressure on businesses and it’s not set to get better over the coming months.

CBI Scotland has asked the government to commit to business rate freezes and flexibility in paying loans with a pandemic loan scheme expanded.

The body has also asked for the industrial energy transformation fund to be expanded to help businesses use less energy and help households with bills.

Following the announcement of the energy price cap hike on Friday, Scotland’s energy secretary Michael Matheson said Ofgem needed to intervene to help support SMEs and the energy costs they were facing. However, he was unable to say whether or not the Scottish Government’s commitment to ensure the NDR revaluation due to take place in 2023 would go ahead.

By Hannah Brown

Source: Edinburgh News

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£50m funding line secured for Wilmslow bridging lending firm

MS Lending Group, the Wilmslow-based bridging lending firm, has secured an initial £50m senior-secured facility with Pollen Street Capital.

London-based alternative investment asset manager, Pollen Street Capital, invests in credit and private equity strategies, focusing on real estate, financial, and business service sectors.

Michael Stratton, CEO and founder of MS Lending Group, said: “This partnership with Pollen Street further boosts MS Lending Group’s ability to provide finance and funding solutions across the market.

“The injection of funds means we can remain agile in the market – not only with speed and ease for our customers, but also the hands-on, hassle-free service which is what we’re known for.

“With uncertainty around interest rates increasing, this is a huge statement from us as a lender to show our customers and brokers they can rely on us, knowing the security of our funding partners and that we have a fixed facility in place.”

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He added: “It has been refreshing to work with like-minded individuals at Pollen Street who understand and support our business ambitions and growth plans, plus it’s a huge credit to the MS team that we’re at this stage after only 18 months of trading. We are really looking forward to a long and successful partnership with Pollen Street.”

MS Lending Group have financed more than £55m since it began trading in January 2021, with in excess of half of that lent in the first half of 2022.

Ben Jackson, investment manager at Pollen Street Capital, said: “Our real estate strategy is built on selective partnerships with real estate lending platforms.

“This new facility with MS Lending Group fits well with our strategy and our aims to maintain liquidity in the short term bridge lending market. We are thrilled to be working with Michael Stratton and Robert Goodall who bring over 40 years’ experience in the industry to MS Lending Group.”

By Neil Hodgson

Source: The Business Desk

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Rising costs and cash flow pressures squeezing businesses with company insolvencies up 67% year-on-year

Insolvency figures released today for July 2022 by the UK Government’s Insolvency Service showed corporate insolvencies at 1,827, up 67% compared to the same month last year (1,827 in July 2022 and 1096 in July 2021).

They were 27% higher than the number registered in the July before the pandemic (1,440 in July 2019).

Leading restructuring and insolvency professional Oliver Collinge from PKF GM in Leeds said, “The large rise in corporate insolvency numbers is not surprising compared to this time last year. But alarm bells ring when there is a material increase on pre-pandemic levels, as we are seeing now.

Many distressed businesses managed to keep afloat through Covid by using the high level of government support available. Most businesses are now repaying BBLS or CBILS loans and many are also still repaying HMRC liabilities deferred during the pandemic, and rising input costs are adding to these cash flow pressures.”

Challenging times ahead as cash flow pressure on businesses grows and even better-performing businesses won’t be immune, Oliver continued, “The current headwinds will create challenges even for better-performing businesses, not only those that were already in survival mode.

“The inflation rate suggests there may be more interest rate rises to come, and there’s open talk of a recession. The cost-of-living crisis has led to the biggest fall in real pay on record, and households are reining in spending.

“Pressure on cash continues, and unfortunately, we expect to see heightened levels of business failures for some time to come.”

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Creditors’ Voluntary Liquidations (CVLs)
The increase is primarily driven by Creditors’ Voluntary Liquidations (CVLs), where directors have chosen to place their business into an insolvency process. In July 2022, there were 1,609 Creditors’ Voluntary Liquidations (CVLs), 60% higher than in July 2021 and also 60% higher than July 2019.

PKF GM thinks this may partly be because creditors can now take enforcement action, forcing directors to take pre-emptive action. There is also significant anecdotal evidence that many of these liquidations involve small companies which had taken out Bounce Back Loans and are now unable to repay them.

Collinge said, “Whilst the Covid loans, support packages and interventions staved off many business closures; the repayments on these loans, together with the worsening macro-economic climate means many businesses are beginning to experience severe cash flow pressure.

“It’s critical businesses act early and seek advice if they are struggling now or think cash flow may be squeezed in the coming months. The earlier they act, the more options they’ll have to secure the business’s long-term survival.”

Other types of insolvencies
Numbers for other types of company insolvencies, such as compulsory liquidations, remained lower than before the pandemic, although there were 3 times as many compulsory liquidations in July 2022 as in July 2021, and the number of administrations was twice as high as a year ago.

A message to company directors
Collinge added, “There are plenty of proactive things you can do now to build resilience into your business for the post-Covid economy; don’t leave it too late. Having a restructuring professional guide you through the process can be invaluable in getting the best outcome and will also help you understand and mitigate your risk as a director.”

“For struggling businesses, it’s not too late to begin negotiations with landlords and creditors to develop manageable repayment plans. Will revenues be high enough to support your cost base?

“Will cash flows be sufficient to deal with the additional debt burden (both formal and informal) that has accrued during Covid? Perhaps a CVA is something which should be considered or, where you may need to take the difficult decision to make redundancies to survive, consider applying for government funding to meet the short-term cash impact of this.”

Source: London Loves Business

Small businesses
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Nine steps to starting a business

There are a lot of things to consider when starting a business. But don’t worry; this article is here to help. Follow these simple steps, and you’ll be on your way to success in no time.

  1. Figure out what you want to do
    This may seem like the most obvious step, but it’s important to take some time to really think about what you want your business to be.

What are your passions and skills? What needs are not being met in the marketplace? Once you have a good idea of what you want to do, you can move on to the next step.

  1. Do your research
    Before you start putting any money into your new venture, it’s important to do your research. This includes things like studying the competition, identifying your target market, and putting together a business plan.
  2. Get the money you need
    Starting a business takes money. You’ll need to have enough to cover your startup costs, as well as enough to keep the lights on and pay yourself (and any employees) until the business is generating income.

There are a few different ways to get funding, including taking out loans, selling equity in your company, business credit line, or using personal savings.

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  1. Find the right location
    The location of your business is important for a number of reasons.

You want to be sure you’re in an area that makes sense for your type of business, and you also want to make sure you’re in a place where people can easily find you.

  1. Get the right team in place
    No business can be successful without the right team in place. In addition to yourself, you’ll need to have employees or contractors who are experts in their respective fields.

It’s also important to have a good support system in place, including family and friends who believe in your vision.

  1. Promote, promote, promote!
    Once your business is up and running, getting the word out there is important. There are a number of ways to promote your business, including advertising, social media, and public relations.
  2. Be patient
    Starting a business is a lot of work and doesn’t happen overnight. So it’s important to be patient and to keep your eye on the long-term goal. Remember, Rome wasn’t built in a day!
  3. Be prepared for bumps in the road
    No business is immune to challenges, and there will inevitably be times when things don’t go as planned. It’s important to be prepared for these setbacks and to have a way you’ll overcome them.
  4. Celebrate your successes!
    Last but not least, don’t forget to celebrate your successes. Every milestone, no matter how small, is worth celebrating. This will help keep you motivated and focused on your goals.

In conclusion
By following these simple steps, you’ll be well on your way to starting a successful business.

Just remember to take your time, do your research, and surround yourself with a great team. And before you know it, you’ll be on your way to achieving your dreams.

Source: Retail Tech Innovation Hub

SMEs
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SMEs Increasingly Concerned About Possible Recession

Small business owners are concerned about the possibility of a recession, according to iwoca’s latest quarterly SME Expert Index.

With both the cost of living and of doing business climbing, over three quarters of brokers surveyed (77 per cent) say SMEs are worried about the possibility of a recession. By contrast, fewer than seven per cent of brokers reported their small business clients as ‘unconcerned’.

iwoca’s Q2 2022 SME Expert Index is based on insight from UK brokers who collectively submitted over 1350 applications for unsecured finance on behalf of their SME clients in June.

Demand for finance increases as small business owners contend with rising inflation
As small businesses face mounting economic uncertainty, their demand for finance has risen sharply. Almost half of brokers (46 per cent) submitted more loan applications for small business financing in the last month compared to the one previous – a continuation of an upwards trend since the end of last year, with 28 per cent citing the same in Q4 2021, and 34 per cent reporting increased loan demand in Q1 2022.

In addition, the latest SME Expert Index saw 0 per cent of brokers reporting significantly fewer applications.

The survey also reveals that small businesses are looking for larger loans in light of the turbulent economic forecast. Over one in eight brokers (13 per cent) identified £200,000+ loans as most sought after for small businesses, the highest proportion since the Index was first released. Looking back at this trend, demand for loans valued above £200,000 has steadily increased since iwoca’s first Index in Q1 2021 when only four per cent of brokers reported these larger loans as the most commonly requested.

To meet this growing appetite for high value loans in the small business sector, iwoca recently announced that it is more than doubling the maximum size of its core lending product, Flexi-Loan, allowing small business owners to access business loans up to £500,000, up from a previous lending cap of £200,000.

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Managing cash flow a key priority amidst the economic storm
This heightened demand for financing, and larger amounts of it, suggests small businesses are gearing up for financial strain: in particular, cash flow issues. Over a third of brokers (37 per cent) reported managing day-to-day cash flow as the most common loan purpose for SMEs. This represents an increase of six percentage points since last quarter.

Nonetheless, as in Q1 2022, brokers report ‘growing the business’ as the most common reason for SMEs business owners to apply for finance, although it’s down by three percentage points since Q1. So, whilst managing day-to-day cash flow is becoming more important, small businesses are continuing to seek loans to finance broader growth ambitions.

Steven Scoufarides, head of broker channel at iwoca , said: “The current economic outlook for small businesses is precarious – we are seeing signs of an increasing number of SMEs searching for finance solutions to manage their cash flow and brace for the potential of a recession. But, as they’ve proven time and time again, small businesses are resilient and will shield themselves against this economic threat in every way they can; encouragingly, it looks like most are still seeking finance to grow their businesses, rather than to holster it up. At iwoca, we’re working hard to adapt to small businesses’ needs, which is why we’re now offering the higher-value loans up to £500,000.”

Leanne Barry, broker at LB Finance Solutions Ltd, added: “We have definitely been receiving more applications from smaller businesses over the last two months since the Recovery loan scheme came to an end. This is mainly from businesses that either did not manage to source any government backed funding, or indeed have already used any funding they received for cash flow and are now needing further funding to stay afloat.”

By Nathan Gore

Source: The Fintech Times

UK SMEs
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Investment in smaller businesses in the East Midlands is on the rise

2021 was an exceptional year for UK equity finance, with investment in smaller businesses reaching nearly double its 2020 level at £18.1bn.

This is good news for businesses, as the country continues to recover from the impacts of the COVID-19 pandemic and tackles new economic headwinds.

Encouraging signs for the East Midlands

The British Business Bank recently launched its Small Business Equity Tracker for 2022, revealing an encouraging rise of investment in the region.

Smaller businesses in the East Midlands secured £154m of investment across 50 deals in 2021. This represented a 92 per cent increase on 2020, while the number of deals increased by 32 per cent.

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Tech is leading the way

The technology sector attracted the largest amount of investment in the East Midlands at £35.2m, up by 188% from £12.2m in 2019. From a low base, the number of deals are rising gradually across most tech sectors and it’s encouraging to see the value of deals increasing within life sciences, trebling compared to 2019 to £12.8m and clean tech increasing to £7.9m, from less than £100,000 invested in 2019. Across the UK, investment in environmentally friendly clean technology was worth £436m, up 38 per cent from the previous year.

Although this data signals investor confidence in the region, businesses outside of London, including in the East Midlands, are still underrepresented in terms of their share of equity finance.

Last year, 1,286 deals worth £11.9bn took place in London, representing 49 per cent of the UK’s total number of equity deals and 66 per cent of total investment – both a slight increase on 2020’s figures (three and one per cent respectively).

This was however due to stronger growth in London than the rest of the UK, rather than a decline in the activity in the other regions in 2021. The British Business Bank is working to identify and reduce regional imbalances in access to finance through a series of programmes to support supply of and demand for finance across the UK regions.

In the Midlands, our Midlands Engine Investment Fund (MEIF) has provided key financial support for SMEs throughout the East and West Midlands, with more than £150m of investment since 2017, with an additional £251m of private sector co-investment leveraged as a result of the MEIF’s work.
Our Regional Angels Programme commits funds for investment alongside business angels and other early-stage equity investors, acting as a catalyst to bring longer-term capital to smaller businesses with growth ambitions.

Commitment to smaller businesses

The East Midlands is a region of innovative business, covering a whole host of sectors that are striving for growth. The rising level of investment is a big indication of confidence in the area after the uncertainty and adversity they have faced over the past few years.

Smaller businesses will continue to be mindful of economic challenges in the coming months, the British Business Bank will be working to help companies looking to grow access the finance they need to succeed whatever the stage of their development

Information can be found, along with independent and impartial advice, on the British Business Bank Finance Hub – which outlines all the financing options available to small businesses.

By Dr Sophie Dale-Black

Source: The Business Desk

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Banks told to stop mistreatment of small firms struggling to repay their debts

The UK’s financial watchdog has ordered bank bosses to improve their handling of debts of small business customers, including emergency loans issued during the Coronavirus pandemic.

Responding to the surge in inflation that is placing consumers and small firms under increasing pressure, the Financial Conduct Authority (FCA) reviewed 11 banks’ management of SMEs in financial difficulty and found repeated instances of poor service and failures to treat customers fairly. This included “where relevant” the handling of government-backed pandemic support provided through the Bounce Back Loan Scheme (BBLS).

Failings included gaps in policies and procedures; inadequate staff training; systems and procedures that make it difficult to deliver fair outcomes; and poor record keeping. This led to breakdowns in identifying vulnerable customers, and inadequate provision of suitable forbearance options to those struggling with repayments.

The City regulator is now calling on the entire sector to rectify this, adding that it will take further action if problems continue.

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“We have written this letter to all chairs of retail banks with SME customers to make sure the issues we raise are given the appropriate attention at both board and executive level,” the FCA said. “We expect the board to ensure the issues identified are considered and, where necessary, addressed promptly.”

The FCA added: “Where customers have been adversely impacted as a result, we would expect your firm to put things right.”

The regulator said frontline staff were often not given training to deal with customers in financial difficulty yet were still required to decide on making a referral to a specialist team. In addition to staff lacking sufficient experience to correctly judge whether a referral was needed, there was also evidence of “staff not considering or acting on information provided to them by customers”.

There were also instances where referrals did not go through because of inadequate systems or procedures, resulting in a failure to receive specialist support or lengthy delays before support was provided.

“We continue to monitor outcomes and carefully scrutinise firms in this sector and will use our supervisory and enforcement powers to take further action as necessary,” the regulator said.

By Kristy Dorsey

Source: The Herald