Bibby Financial Services calls for more SME support to aid recovery
The head of the UK’s leading independent invoice finance provider is calling for more to be done to support small and medium sized enterprises (SMEs) in the wake of the latest Bank of England figures, which show net lending to businesses falling.
Figures show bank lending to businesses fell by £600m in January, with lending to SMEs contracting by £300m.
UK chief executive of Bibby Financial Services, David Postings, said: “Now is the time for funders to look at ways to increase lending to small and medium sized enterprises. We’ve been through a period of bear market, which we are starting to move away from but it’s vital that businesses have a consistent supply of working capital to help achieve the level of growth the Government is hoping for this year.
“If this doesn’t happen, there’s a danger that the positivity we have waited so long to see will be short lived.”
Figures show the flagship Funding for Lending scheme slowed in the final quarter of 2013 with lending growth of £5.8bn, in comparison to £6.2bn in the previous quarter. Meanwhile, asset based lenders have increased funding advanced to SMEs to £18.3bn – its highest quarterly balance - a sign that ‘alternative’ lending is becoming increasingly mainstream for UK businesses.
“Funding types, such as invoice and lease finance, are often referred to as alternative, but many businesses are unable to access traditional forms of funding so what is this alternative to?” Postings said.
“Invoice finance providers in particular have made significant progress in recent years so businesses that cannot access bank lending, have funding in place – not only to support cashflow – but also to invest, which is what is needed if we are to ensure consistent economic growth.”
According to the Asset Based Finance Association (ABFA) sales turnover for businesses using this form of funding in 2013 increased to £275bn, year-on-year growth of 10 per cent. Kate Sharpe, chief executive of ABFA said: “The latest figures show that asset based financiers are providing more finance than ever before and this is helping to drive the recovery.”
Postings added that a focus on flexibility and customer service is what sets apart the independent invoice finance firm and its counterparts from traditional lenders: “The difference is that our lending practices are far less ridged, enabling us to get under the bonnet of our clients’ businesses to find way to fund them.
“There’s a misconception that this type of lending is only used to stabilise cashflow but this isn’t the case. We fund mergers, acquisitions, management buy-ins and management buy-outs, and we help to free-up working capital for businesses to recruit. Furthermore, our export teams provide multilingual and multicurrency services to help businesses trading overseas so we can support businesses whether their aspirations are domestic, international or both.”
In January, Bibby Financial Services announced the expansion of its leasing division, which it sees as a significant growth area. Postings said “The SME environment is far from ‘one size fits all’ so lenders need to look at the needs of individual businesses and to tailor their propositions accordingly.
“It’s for this reason that we have invested in our leasing division and being able to expand our expertise more broadly supports our vision of helping more businesses overcome financial barriers to growth.”
The level of personalised service independent lenders provide to customers is also a differentiating factor, concluded Postings: “We have people on the ground working with businesses day-in, day-out, and our ethos is to go the extra mile to ensure that we can support their plans through a variety of funding types.”
Picture - UK chief executive of Bibby Financial Services, David Postings