Packaging company criticises Funding for Lending on Radio 4

Paul later appeared on a range of BBC TV news outlets including BBC News 24.

Changes announced by the Bank of England and HM Treasury today mean the scheme, which is designed to encourage lending from banks to SMEs, will run for an additional year until January 2015. Incentives for banks to lend have also been changed and certain non-bank providers of credit have been included for the first time.

Paul took the opportunity to outline the challenges faced by many manufactures and SMEs when approaching banks for funding. Touching on Duo UK’s management buy out in 2009 and a recent purchase of a €600,000 co-ex machine, Paul explained how banks are “very, very risk adverse” and offered only a “lukewarm” funding package, although Duo UK successfully raised the required funds via the Italian markets.

Commenting specifically on FFL, Paul said: “It hasn’t made a difference to us, and looking around, it doesn’t seem to have made much of a difference to other businesses. The only place it seems to have made a difference is the mortgage market.”

The BBC’s business editor Robert Peston, backed Paul’s analysis the  bank’s continuing adversity to risk saying: “Importantly, the problem that Paul identified, that the banks are worried about the risks of lending to businesses because they are pretty fearful they will make losses; the governor of the Bank of England hasn’t addressed that problem.” Mr Peston went on to explain the only way this issue could be solved was for the Treasury or the Bank of England to take on some of the losses, “as they have done in the housing market”, before going on to discuss the new incentives offered under FFL.

Duo UK’s managing director David Brimelow commented: “This year marks our 25th year in business and we’re in a great position to invest and grow, although raising finance has proved a real challenge. We know this is a common scenario faced by many SMEs, so this was a great opportunity to share our experience on national TV and radio.”

Duo, which turns over £25m a year, manufactures and supplies bespoke packaging products for leading e-retail, retail, mail order and industrial brands with all aspects of the manufacturing process carried out in house. High profile clients include ASOS, Tesco and JD Williams.