Better bank lending needed

The Forum of Private Business (FPB) is calling for bank lending to be made more accessible and affordable following a report identifying a ‘permanent gap’ in small business finance.
 
In its submission to the Rowland’s Growth Capital Review, which highlighted a major shortfall in growth capital for businesses seeking between £2m anfd £10m, the FPB called for a range of finance options to be made available for more small firms, including those requiring significantly less capital.
 
Following the review, which was led by venture capital expert Christopher Rowlands and included ‘Dragons’ Den’ entrepreneur James Caan, the government announced plans to introduce a new growth capital fund to plug the gap. In addition, it revealed there will be a £1 billion innovation fund for technology start-ups.
 
However, the FPB believes that the banks must also play their part by increasing the availability of lending – particularly investment of between £100,000 and £500,000, which is the level typically required by most small businesses. The FPB is also arguing that the steep cost of bank finance must be reduced without delay.
 
“We are entering a key period,” said the FPB’s policy representative Matt Goodman. “Firms are likely to require finance from a greater range of sources over the next year. Growth funding is certainly welcome but must be accompanied by more sustainable banking lending and public sector support – including a replacement for the Enterprise Finance Guarantee (EFG) – so that they are able to take full advantage of future opportunities.”

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