34 roundtable: funding for SMEs Participants Kerry McKeown


Santander hosts roundtable discussion on funding for SMEs


With precious little UK economic growth and continuing turmoil in US and Eurozone finances, The Business Magazine and bankers Santander invited sector experts to Southampton to discuss the funding situation for businesses in our region. It prompted the question: ’Are we ready for a sea-change?’ Below John Burbedge reproduces a selection of the highlights


Director – tax Grant Thornton accountants


Nigel Vaughan Solent Synergy business network


Paul Haley Company director Business Growth Connections


Andrew Heathcock


Managing partner Paris Smith lawyers


Mike Donaldson Relationship director Santander Corporate Banking


Julian Winfield


Chief executive Haskins Garden Centres


Ian Cole Regional director Santander Invoice Finance


Alex Fuller


Deputy regional director Santander Corporate Banking


Emily Denyer Managing director Chewbz, retro sweets business


David Murray


From left: Ian Cole, Kerry McKeown, Paul Haley, Mike Donaldson, Nigel Vaughan, Julian Winfield, David Murray, Alex Fuller, Andrew Heathcock, Emily Denyer and John Burbedge


Are we ready for a sea-change?


David Murray invited Santander Corporate Banking as hosts to give their views on the current state of the Solent and UK economies and on business funding in particular.


Alex Fuller began by highlighting the macro-trends influencing the Solent area. ”GDP is very lack lustre with Q2 only up 0.2%, impacted by the Japanese tsunami and the Royal wedding. The forecast is 1.1% by the end of the year.


”We are seeing a lot of corporates and VCs sitting on cash, and consumer spending is remaining constrained. There’s lot of fiscal tightening, rising inflation and unemployment is fairly high. Consumer Price Index (CPI) inflation is forecast to touch 5%; it’s running at 4.5% at the moment. Our (Santander) view differs from the Bank of England because we think come the end of 2012, CPI will still be above 3% and ahead of their target threshold.


Although the VAT impact will have gone through and prices should be dropping, we still see CPI as a concern.”


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He noted that the Monetary Policy Committee (MPC) recently voted 9-0 to maintain interest rates. ”Our forecast is that they will stay at current rates to the back end of next year.” The Eurozone? ”Political leaders seem to be trying to come up with a lot of ideas but getting a consensus will be difficult.”


Mike Donaldson summed up the Solent area situation succinctly.


Santander Corporate Banking’s rationale is to look at every business on its merits for potential funding. ”Have they got a good captain (management team), a good ship (company set-up, product or service), and what’s the state of their sea (sector economy)? Under the current circumstances it would be wrong to exclude any sectors for funding, but it is noticeable that some sectors are struggling more than others.”


Fuller agreed: ”Locally, the economic picture is very mixed. There are a lot of good companies in good sectors but no particular dominance and the focus has been on costs and cashflow. Decision-making


Managing editor and publisher of The Business Magazine, and chair of the discussions.


is still slow, and everything hinges on confidence.”


Paul Haley: ”A lot of companies have not invested what they should have done and are now behind the business cycle. Some are still very wary at the moment of committing themselves to any large spend.”


Ian Cole: ”As this country comes out of the downturn there’s going to be growth. Many companies have cut down on their stock levels and will need to grow them, and grow their working capital. Businesses need to structure their finance correctly now to make sure they have the right funding in place for growth, otherwise it might stall their recovery. There’s almost a joint responsibility for the companies and their banks and advisers to be having those funding discussions now – while recognising that the funding world is different today and needs flexible


Continued overleaf ... THE BUSINESS MAGAZINE – SOLENT & SOUTH CENTRAL – OCTOBER 2011


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