Industry comments on Breedon Report on alternative finance

Posted on 19 Mar 2012

A taskforce led by Tim Breedon, CEO of Legal&General, has published a review investigating on alternative and sustainable finance sources for UK SMEs.

The recommendations of the Breedon Report, put to business secretary Vince Cable, include a business support agency to deliver the government’s range of SME finance programmes; the establishment of a Business Finance Advice network; consideration of the possibility for the government’s Business Finance Partnership to invest in innovative products such as mezzanine loan funds and peer-to-peer lending; and investigation of the impact of international prudential regulation on the supply of SME finance.

Commenting on the report, Ms Lee Hopley, chief economist at the manufacturers’ organisation EEF, said: “For manufacturers, the recommendation to work on accelerating the adoption of supply chain finance must be expanded to include the key issues holding back finance providers from supporting supply chain companies with patient growth capital – and not just focus on working capital.

“There remains a gap in the market for capital to support supply chain expansion which is critical to delivering stronger investment and countering the reluctance of SMEs to give up equity in their businesses and rely solely on retained earnings to fund investment.”

John Cridland, CBI director-general, commented: “The government must work with businesses to drive this agenda forward, and we want the Chancellor to give these recommendations the serious attention they deserve in next week’s Budget.”

On the need for a mid-sized UK bond market and other new forms of finance, he said: “This report rightly recognises the important role that banks will continue to play. But many firms need access to a broader range of finance. This could be invoice financing to help with short term cash flow, or access to bonds and private placements which would provide the more “patient” capital growing firms need to invest in the longer-term.