Businesses that seek advice, prepare their case well and are open to considering a range of funding options are likely to find money available to borrow, according to finance experts from the region.

At an Access To Finance round table organised by the Birmingham Post, a consensus emerged among representatives from the world of banking, small business, venture capital and the public sector that the funding landscape was beginning to look more positive, although businesses still needed to be realistic about their expectations.

The event brought together Ben Bolt, investment director at Catapult Venture Managers, Patrick Palmer, head of access to finance at Advantage West Midlands, Steve Walker, chief executive of community development finance institution ART, Denise Craig, West Midlands policy manager at the Federation of Small Businesses (FSB) and Simon Woodcock, business development director Lloyds TSB Commercial Finance and was chaired by Birmingham Post head of business Alun Thorne.

Ms Craig said access to funding seemed to be slowly easing for the organisation’s members. She explained: “In the last couple of years it’s been really bad. We started to notice problems long before the big “R word” started to be used.

‘‘From a smaller business perspective, there’s a sense that all the risk has been on them. Small businessmen have got to risk their homes as well, even when there is some equity in the business. That’s when they get a bit antsy about it.

“But in the last three months, things have been becoming a little less gloomy. There are signs of cause for optimism.”

Mr Palmer of AWM said banks were simply showing the same level of caution that owners of small businesses were demonstrating in the light of the downturn.

He said: “For the manager running their own business, they are being pretty selective about who they do business with.

‘‘Banks are also being selective and businesses need to think “what information do I need to give to make sure they want to do business with me?”

Simon Woodcock of Lloyds TSB Commercial Finance said the key difference in the current climate was that banks were taking longer to consider all the elements of the deal.

He said: “We are probably looking a little bit more closely at what would happen if everything went wrong and what our exit would be. Deals are probably taking a good 20 to 30 per cent longer.”

He highlighted two contrasting approaches that could decide whether businesses get funding or not.

“Businesses that are successful in getting funding have got systems in place, have got management information and the ability to put forecasts together and the common theme is they have taken good advice,” said Mr Woodcock.

“They have gone to the accountants, to lawyers, to Business Link.

‘‘The ones that aren’t are coming with very little business planning and very little thought on what they are going to use the money for.”

Mr Walker of ART said businesses hoping to access finance needed to break away from the expectation that money will come from just one source. “Individuals have to have a package of finance, be it banks, friends and family, ART – it’s a whole package of finance, not just one,” he added. “We are definitely seeing an appetite among the banks who are saying they want to partner with us to do the deals so they can help the business as they don’t want to take all of the risk.

‘‘Also, people have to be more realistic – interest rates are considerably higher than they were”

He added: “If you have a viable proposition, the money should be there. It might come from different packages of sources, but the money is there.”

Mr Bolt agreed that owner managers have to look to different sources of finance, many of which could be more expensive than they had previously been used to.

He pointed to what he called a “Mexican stand-off” between banks, venture capitals and owner-managers which resulted from differences in expectations from a deal.

“Banks are putting forward their propositions, venture capitals putting forward theirs and owner managers are not taking it,” he said. “There are businesses that are developing unique products and it’s in this area that businesses are having difficulties in raising money from the banks, as opposed to venture capital who clearly have a higher cost.

“The reason for that is that markets are volatile and therefore forecasting becomes difficult.

‘‘Everybody is waiting for the bottom of the market.”

He agreed with Mr Walker that businesses needed to consider looking for a package of funding from different sources.

“In order to get the full amount of finance, you have to get a package and that means banks and more expensive finance such as venture capital. The business has to ask ‘do we want to stand still or do we want to capitalise on growth opportunities?’.

“It is a new world where they need to fund that in a different way.”

Mr Palmer agreed that the way the world of finance has changed so quickly took many by surprise.

“That new world came in extremely quickly. I hope we are getting near to that stage where we are bouncing along the bottom,” he said.

Ms Craig said owners of smaller businesses often found it difficult to get their heads around the changing funding landscape, especially when they were concerned with the day-to-day running of a business and surviving in a recession marketplace.

“It’s the owner managers that have to grapple with all this new systems and they have the same 24 hours in a day as anyone else. It’s changing so quickly,” he admitted. “But, on an optimistic note, they can take decisions more quickly.”

Contributed by Kieran Kelly, Commercial Development Manager - Straight Finance is one of the UK’s fastest growing independent business consultancies dedicated to serving the needs of small and medium sized businesses. It is a multi skilled organisation supplying an extensive range of innovative and bespoke support services to all types of businesses. Delivering business finance is at the core of what Straight Business Solutions does, but this is now just one aspect of what is offered.

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