Other News
Scottish Government - Business access to finance
Sector:Central Government
Date Created:Thu 23rd Jul 2009, 14:13:22
Source:Scottish Governement
Link: http://www.scotland.gov.uk/
Finance Secretary John Swinney has called on banks to step up support for strong Scottish businesses to minimise the impact of the downturn and ensure the country recovers strongly.
Mr Swinney urged the banks to do more to extend financial support through responsible lending to viable companies after the Scottish Government today published new figures on finance available from banks for Scottish firms.
The publication, SME Access to Finance 2009, shows:
Evidence that the supply of finance to SMEs in Scotland has reduced. The approval rate for applications has fallen, particularly for micro firms where only 60 per cent of firms have been able to secure any amount of finance sought compared to 82 per cent in 2007. The likelihood of applications being approved increases with firm size
A reduction in the supply of finance to high-growth firms with only 44 per cent of applications being approved in 2009, compared to an approvals rate of 79 per cent in 2007. This compares to approvals for non-high growth firms being 68 per cent in 2009, a reduction of 18 percentage points since 2007
Mr Swinney said:
“This Scottish Government survey is the first major large-scale survey conducted in Scotland looking at the impact of the recession on SMEs ability to access finance.
“The survey shows that, although the majority of firms are able to access the finance they need, there is a significant increase in the proportion of businesses – particularly extremely small companies and high-growth firms – whose applications are unsuccessful.
“That confirms the message we have heard from businesses up and down the country. It is now time for the banks to step up their support for these viable and crucial businesses.
“Through the Scottish Government’s economic recovery programme, we have already earmaked more than 150 million pounds of funding for a Scottish Investment Bank for innovative, high growth SMEs. And our Enterprise agencies are providing thousands of companies with advice and funding support. Latest figures on Regional Selective Assistance – our main grant scheme for business – published today will show continued support for businesses across Scotland.
“And we now expect the banks to play their part with an expansion of responsible lending so that businesses that form the lifeblood of our economy are not prevented from contributing fully to recovery and growth.
“Given there is now substantial public investment in the banks it is crucial that everything possible is done to ensure a return to high levels of responsible lending.
“Today’s report provides a thorough assessment of the financing needs of SMEs in Scotland, particularly during the recession, which will be of value to policymakers and banks alike.
“It is incumbent upon not just the banks, but also the UK Government, to ensure this massive public investment results in viable businesses getting access to the finance they need.”
The Scottish Government recognises that there is a problem in some viable businesses accessing levels of finance, and, in regular dialogue with the banks, continues to press for the banks to return to responsible lending practices, including utilisation of the extended loan guarantee scheme now available.
Businesses in Scotland are successfully accessing the Enterprise Finance Guarantee scheme, with over two hundred offers being made to companies across Scotland involving ten of millions in loan finance. It is important that money under this scheme is reaching small businesses. Companies should be considering this option, when discussing lending needs with their bank.
The Scottish Government economic recovery programme contains a number of measures to assist small businesses in the current economic climate. Examples include: ensuring that business advice and support is available through Business Gateway for firms on cash flow and business efficiency issues; introduction of a 10 day prompt payment target; extension of the Small Business Bonus Scheme from April 2009; increased levels of aid and extended tier 3 support under Regional Selective Assistance; introduced invoice discounting; and allocated £60 million capital funding to Town Centre Regeneration Fund – supporting town centre retailing and business. The Scottish Government has already earmarked more than £150 million of funding for a Scottish Investment Bank for innovative, growth SMEs and our Enterprise agencies are providing thousands of companies with help, advice and funding support where applicable.
