Business leaders call for more help to allow SMEs to Access Cash

Dozens of small businesses in the North West have secured funding from the Government’s Bank Referral Scheme. But Greater Manchester experts say more help is needed

New figures from HM Treasury highlight the growing challenge faced by SMEs in Greater Manchester in borrowing cash for expansion or investment.The Bank Referral Scheme requires Britain’s biggest banks to pass on the details of small businesses they have turned down for loans to online credit brokers who help those to source funding from other lenders.

Since it launched in 2016, 75 firms in the North West have secured funding at an average of £15,000.

In the same period more than 35,000 individual firms in Greater Manchester have faced ‘significant financial distress’ since the bank referral scheme was launched, according to business recovery consultancy Begbies Traynor.

The Treasury has hailed the programme as a success.

But business experts in Greater Manchester say more needs to be done to prepare businesses applying for loans in the first place.

Mark Halstead
Mark Halstead, managing director of Red Flag Alert, the business intelligence service, based in Oldham, said more needs to be done to draw attention to this scheme and business owners need to understand their own credit rating before applying for a loan.

“Long gone are the days where the local bank manager would wave through your loan application on the strength of a personal relationship,” he said. “The key to a successful business bank loan application is to fully understand the strengths and weaknesses in your own business and plug the gaps before making an application.”

Murray Patt, founder of Manchester-based accountants Alexander Knight & Co, said: “Getting a bank loan is an important step for any business and being prepared before making the application will pay off with faster decisions being made and better terms being agreed.”

The scheme was introduced in response to evidence which shows that SMEs tend to approach their main bank when seeking finance and that, if rejected, many simply give up rather than seek alternative options.

According to a new report published by HM Treasury, over 900 businesses have secured more than £15m of funding.

Loans resulting from the scheme ranged from £100 to £1.3 million with the average loan secured at £17,285.

John Glen, Economic Secretary to the Treasury said: “Small businesses are the backbone of Britain, yet many give up on their plans to expand if they can’t get a loan from their bank.

“Now however, thanks to our match-making scheme, they have another shot.”

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