Taskforce pledges help with Better Finance for SMEs

Posted on 16 Mar 2011 by The Manufacturer

A banking taskforce has launched the Better Business Finance campaign which includes a £2.5bn growth fund and the provision of mentors to help companies navigate lending approval decisions.

The Business Finance Taskforce has launched a campaign uniting all UK high street banks that is designed to provide faster approvals for bank lending to businesses. It includes a £2.5bn Business Growth Fund for bank loans to qualifying businesses, aimed especially at SMEs.

The Better Business Finance campaign, originally announced last summer, was launched by the Treasury Secretary Lord Sassoon and Angela Knight (pictured), chief executive of the British Bankers’ Association (BBA), and a panel of bankers at the Global Manufacturing Festival in Sheffield on Tuesday.

The Taskforce comprises the six high street banks – Barclays, HSBC, Lloyds, Royal Bank of Scotland, Santander and Standard Chartered – and the BBA.
The purpose of the campaign is partly to show that the banking industry is committed to investing in enterprise and industry, and partly to answer more clearly the disconnect between two camps – lenders who say they have money to lend at historically low rates and business borrowers who say they cannot get finance at competitive rates, if at all.

Better Business Finance covers 17 initiatives that include improving customer relationships, an effective appeals process for failed applications, providing simply better access to finance and better information for customers.

Part of the campaign is a £2.5bn Business Growth Fund that was announced in February, which comes on stream in May. Backed by the UK’s six big banks it is designed to help small manufacturing and service sector companies in its first year.

A website, www.betterbusinessfinance.co.uk, provides companies with a route to financing options and explains how approval decisions are made, drawing on factors like the applicant’s turnover, cash position and debt. Described as the “fast portal that businesses have been looking for”, it is designed as a navigation tool not an application process.

The site describes alternative, non-bank sources of finance like equity financing, and techniques like discount invoicing and factoring, explaining their suitability for a company’s needs. It also provides fact sheets to assist with writing a business plan to access government’s Export Finance Guarantee scheme.

Better Business Finance (BBF) has several other components, including a nationwide mentoring service whose job it is to guide smaller businesses through finance application processes to achieve better results.
The campaign is linked to the New Business Growth Fund, which provides £200m in equity funding for companies for whom a loan is not suitable and the Taskforce pledged to help make funding suitability clearer to companies.

It also claims to provide clearer access to the Government’s Enterprise Finance Guarantee fund, to help, mainly larger, companies who qualify to access syndicated debt options from more than one bank, and, in time, to provide better support for access to trade finance. The new rules of the Basle banking code which mandates bank capital ratios does not recognise trade finance as a form of debt. This can increase the cost of trade finance and the BBA claims it is an oversight of the Basle system that it is working to include in its capital ratio method.

The Taskforce also promised to provide better quality information to customers as part of the campaign, pledging to provide information in bank branches and to provide comprehensive lists of non-bank lenders like equity finance companies and business angels.

It also pledged to execute a business finance survey of 1,000 companies across the UK and all sectors, which it said would shape the Taskforce’s future objectives and would be a benchmarking survey for industry and government.

Launching the campaign the BBA’s Angela Knight said: “Business and enterprise are at the heart of the economy and banks are ready to play their full part in supporting our customers. Money is there for viable businesses and we want to work with business organisations and firms to ensure they are able to access the funds they need.”

A nationwide roadshow of BBT events that explain how the Better Business Finance programme works will take place throughout 2011, see below for details.

Useful links:
Business Finance Taskforce – www.bba.org.uk/taskforce

Details of the Better Business Finance Outreach roadshow – www.betterbusinessfinance.co.uk/events

Global Manufacturing Festival: Sheffield

Look out in the Finance and Blog section for manufacturers’ questions and answers to the Taskforce panel at the Better Business Finance launch at Cutler’s Hall, Sheffield, on March 15.