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Bank Lending

Scottish businesses are unaware of financial options available

By CreditMan Monday, September 22, 2014

Scotland’s thriving SME sector could be boosted further through the use of other forms of finance - on top of traditional lending channels - according to broadcaster Andrew Neil.

Speaking at Bibby Financial Services’ ‘Fit For the Future; Financing Business Aspirations’ events in Glasgow and Aberdeen, Neil said there was an evident lack of awareness of other forms of funding such as peer-to-peer lending and invoice finance.

More than 200 delegates including finance brokers, SMEs, accountants, IFAs, attended both events which took place on the eve of the referendum for independence.

Mr Neil said: “Working capital is key for growing businesses, but many aren’t aware of the options available beyond traditional bank loans and overdrafts.

“There are a number of funders throughout the country willing to lend to SMEs and it’s important that owners and advisors consider the most suitable form of finance, which could mean spreading their gaze beyond the banks.

“Now is a good time for businesses to borrow while interest rates are still low”, Mr Neil continued.

The events heard from various entrepreneurs talking about their experiences in business, and included a speech from world-record breaking cyclist, Mark Beaumont. The two sessions served to highlight the existence of an energised business environment in Scotland, despite distraction of the referendum.

Delegates spoke about their ambition to invest in their future but at the same time are still frustrated that access to working capital is still a struggle for many businesses.

According to a recent study by event host and funder, Bibby Financial Services, 42 per cent of businesses use overdrafts as their main source of funding, 37 per cent use bank loans, with only one in five leveraging private equity, crowd funding or invoice finance.

The ‘SME Sentiment Scotland’ report also found that only 14 per cent of businesses had applied for funding over the past 12 months.

Alan Anderson, Head of Sales for Bibby Financial Services Scotland said: “Having the right funding in place, coupled with the right finance partner in place is critical for growing businesses.

“We know the intermediary network in Scotland is strong and the brokers and introducers we deal with tell us that the SME environment is thriving.

“However, bank lending continues to contract as they focus on the mortgage market, but alternatives are available and we see that message coming through.

“More businesses throughout the country are turning to the flexibility of invoice finance and other non-traditional forms of funding than ever before but there’s still a long way to go in terms of raising awareness. In July alone, across the UK we provided £40million of funding to SMEs.

“We have capacity to increase our funding in Scotland significantly, which would not only boost local businesses but also fuel local economies”, Mr Anderson added.

Taking a short break from his coverage of the referendum to speak at the events, Mr Neil also said that export markets present a significant opportunity for businesses in Scotland. He said: “In 2008, businesses in the UK exported more to Ireland that to Brazil, Russia, India and China combined but there are significant export opportunities available to businesses that can seize them, but this involves developing business outside Europe.”