In a survey of over 1,400 FSB members, only 18 per cent of businesses have applied for new credit, with 50 per cent of these successful in their application.  As the state owned banks have been given new lending targets by the Government, the survey also revealed that just over a third of businesses (36 per cent) had their application refused, with 12 per cent yet to find out the bank’s decision.
 
For businesses with existing finance, the survey also showed that 16 per cent had seen an increase in the cost over the last two months. Of these, 44 per cent saw between a two and three per cent rise, but more worryingly 12 per cent saw interest rates hiked anywhere between 10 and 14 per cent, at a time when the base interest rate is at an all time low. Only one per cent of respondents had seen the cost decrease.
 
The Chartered Management Institute’s (CMI) Economic Outlook Survey also found businesses struggling to access credit, reporting that 42 per cent of the managers surveyed at the beginning of April this year have experienced deterioration in the availability of finance for long term investment, while 40 per cent have also seen a reduction in short term investment. Eighty-one per cent surveyed by CMI agree that the government should introduce further measures to improve bank lending to businesses
 
The FSB believes that the introduction of the Small Business Credit Adjudicator announced in the budget earlier this year will help to ensure small firms are given a fair deal and a right of appeal against decisions made by big banks.
 
John Walker, National Chairman of the Federation of Small Businesses, commented, “Trust needs to be restored between banks, bank managers and business as credit conditions remain tight for small firms. We hope the next government – of whatever hue – will look at the best way to address the issues in the banking system to ensure that the UK has the necessary financing structures to support further economic recovery.
 
“Small businesses continue to bear the brunt of the financial crisis and are being penalised with extortionately high interest rates. At any time, not least when the economy is on such a fragile path out of recession, a 10 to 14 per cent increase in costs is highly unreasonable.

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The Debt Boutique

Pre-Pack & Transaction Funding Specialist Debt Packagers

Funding Opportunity of the Month – January 2010

• Grants from £100,000 upwards
• Available across England & Wales (except London)
• Available for Turnaround situations

We have tied up with a firm of grant specialists who are able to source grant funding for turnaround situations where:

• there is a realistic turnaround proposal (so no dead ducks)
• the bank or other existing funders remain supportive (which essentially means that the new funds are not simply to be taken in reduction)
• the funding is justified by the sustainability of the business and protection of the jobs of substantial parts of the workforce (but not necessarily all)

Funding can be arranged quickly, in one case within three weeks, and is typically in the range £200,000 to £300,000.

Applicants will require full business plans including three year forecasts (ten year forecasts required for sums in excess of £500,000).

The first step is an initial review of the prospect and assessment of the grant support that may (or may not) be available. At £75 for this initial report is this something that a business seeking funding can afford to miss?

When time and success are of the essence, use the specialists

As experienced turnaround and financing professionals we understand the need for the right deal, on the right terms, delivered in the right timescale.

For more details of how we may be able to help your clients contact Mark Blayney on:

Tel: 01434 345528
Mobile: 07769 686450
Email: help@turnaroundhelp.co.uk

About The Debt Boutique

The Debt Boutique is a specialist service focused on the professional and swift arrangement of packages of structured finance, across the whole of the UK, to support time pressured Pre-Packs and other Transactions.

It combines the skills and experience of two leading practitioners in the area.

Institute for Turnaround member Mark Blayney is a Chartered Accountant with a 20 year background in SME corporate insolvency, turnaround, restructuring and refinancing including experience in intensive care banking and asset finance broking.

He works closely with Stuart Hare, one of the UK’s leading commercial asset finance brokers and founder member/director of the NACFB, with 25 years of experience in working with IPs and bank work out teams on refinancing rescues and exits.

www.debtboutique.co.uk

www.turnaroundhelp.co.uk

http://debtboutique.financial.officelive.com/default.aspx

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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Numbers of deals completed between 2006 and July 2009 in brackets.

Deals up to £250,000
YFM Group (24)
North West Equity Fund Managers (6)
Braveheart Investment Group (5)
Ridings Early Growth Investment Company (5)
Finance Wales (5)
NESTA (4)
Envestors (4)
Catapult Venture Managers (4)
UK Steel Enterprise (4)
South East Growth Fund Managers (3)

Deals between £250,001 and £2 million
YFM Venture Finance (39)
Catapult Venture Managers (29)
NorthStar Equity Investors (25)
NESTA (18)
Scottish Enterprise (17)
Braveheart Investment Group (16)
Finance Wales (15)
Midven (13)
Enterprise Ventures (13)
MMC Ventures (12)

Deals over £2 million
Accel Partners (26)
3i Group (25)
Amadeus Capital Partners (22)
Scottish Equity Partners (17)
Atlas Venture UK (13)
Balderton Capital (11)
Intel Capital Corporation (8)
Tudor Investment Corporation (8)
Benchmark Capital (7)
Goldman Sachs (5)

Research compiled by Bureau van Dijk from its ZEPHYR database. Deals had to involve the acquisition of a minority stake in a UK company and were capped at £500 million.

Contributed by Growth Business www.growthbusiness.co.uk

The views contained in this article are solely those of the author and do not necessarily represent the views of the Commercial Finance People

Following a successful pilot period that helped more than 400 businesses in less than a year, One North East’s Rural Enterprise Fund has been allocated an extra £2.5 million from the Rural Development Programme for England (RDPE).

Grants are available to help land-based businesses in the region diversify and develop alternative sources of income, and can cover start-up costs and working capital, marketing initiatives, product development, and technical support.

The programme’s remit has also been extended to include the installation of renewable energy generating technologies, such as wind turbines and biomass boilers.

Ian Brown, a rural board member at One North East, said:

“Small businesses are a huge part of the rural economy so it is important that we show our support by putting our money where our mouth is and making this funding available to those who can benefit from it.”

Adrian Sherwood, One North East’s RDPE manager, said the extra investment would provide “essential” assistance.

He explained:

“The funding is about helping rural businesses develop alternate sources of income which will in turn help our farming, food and forestry industries thrive and become more competitive, all together enhancing opportunities for rural businesses and communities in the region.”

Source: j4b Grants

For further information about the programme, contact Business Link in the North East on 0845 600 9006 or email enquiries@businesslinknortheast.co.uk