26 business focus of the month
HW, Chartered Accountants, presents a series of articles based on the HW blogs. They offer analysis, reviews and comments and welcome your feedback at
www.hwca.com/blog
Credit easing should go further writes Colin Fletcher, HW, Chartered Accountants, High Wycombe
After quantitative easing we now have credit easing – also known as the government’s ‘National Loan Guarantee Scheme’. This has been introduced as part of government policy to encourage growth by increasing bank funding to SMEs. The scheme offers a subsidy on borrowing to small businesses with a turnover of up to £50 million.
The idea is that the Treasury will guarantee bank borrowing so that banks can borrow more cheaply and, in turn, offer lower interest rates on borrowing to SMEs.
Five banks are participating to
start with – Aldermore, Barclays, Lloyds Banking Group, Royal Bank of Scotland and Santander UK. HSBC is a notable absentee, stating that it’s not ‘commercially viable’ as its cost of borrowing is already quite close to the government’s cost of borrowing.
Initially the Treasury will make £5 billion of loans available and participating banks will offer them at a 1% discount to the standard lending rates that they would normally offer the SME.
It’s thought that the £5b will be taken within six months, so a further £15b is believed to be reserved, to be made available over the subsequent 18 months.
While this initiative will make borrowing cheaper for those companies that would already be able to get funding, it won’t release additional funds to support other businesses. The Treasury is not forcing banks to take greater risks when lending to businesses, so the total volume of lending to small businesses is not likely to increase as a result of this scheme.
Banks will control the process and, given the failure of Project Merlin, one has to ask why this initiative should prove a success?
SMEs have seen increased costs on arrangement fees and tougher requirements on loan collateral
Scientifica wins Queen’s Award
Scientifica, which has a production facility in Maidenhead where it develops and manufactures high quality equipment for electrophysiology researchers, has won a Queen’s Award for Enterprise (International Trade 2012).
The Queen’s Award recognises the contribution that export has made to Scientifica’s growth over recent years. Today, 70% of the company’s business is achieved through overseas sales. The US is its biggest market, followed by France, Germany and the rest of Europe, but the company has also opened up new markets in the Asia Pacific region and is now successfully trading in China, Japan, South Korea, Singapore and Australasia.
“This Award is the ‘cherry on the cake’ for us, a real sense of achievement,” said Maidenhead- based David Rogerson, joint managing director of Scientifica.
Scientifica products are used by researchers around the world, predominantly in universities and pharmaceutical companies, the majority of whom are involved in
www.businessmag.co.uk
solely on providing products for the electrophysiology market, which gives our customers reassurance that we understand their requirements and have their best interests in mind. In addition, our engineering quality is universally regarded as excellent and the range we offer is comprehensive.
From left joint managing directors of Scientifica Mark Johnson and David Rogerson
research into neurodegenerative diseases including Parkinson’s and Alzheimer’s, as well as cancer.
The team in Maidenhead numbers 14 people and includes a number of apprentices.
“We want to give something back to the local community here in Maidenhead and have a very strong apprentice programme,” said Rogerson.
In addition to its production facility in Maidenhead, Scientifica also has an office in Uckfield, East Sussex. Since it was launched in 1997, Scientifica has grown from a small business to a company employing 42 people across its two sites. Turnover has increased by more than 25% year-on-year for the past six years.
“Our success is due to a number of factors,” Rogerson added. “We focus
“We manufacture and sell all the component parts of an experimental rig, which means customers don’t have to go from one supplier to another to get all the different pieces of equipment they need. In addition, we offer flexibility – modifying and adapting equipment to suit our customers’ needs.”
Mark Johnson, joint managing director, said: “We’ve found that building relationships with our customers is key. Researchers move around from university to university and from country to country and they consistently remain loyal to us. The majority of our sales people are scientists themselves, so they understand our clients’ requirements. In addition, the person who sells the products is the person who goes to install them. This is unusual – but it works.”
THE BUSINESS MAGAZINE – THAMES VALLEY – MAY 2012
over the past few years and these are having a significant impact on borrowing decisions, which a 1% reduction in interest is unlikely to offset.
Surely it’s time to focus on how the banking sector is structured and come up with some helpful changes there, which could impact far more favourably on SMEs?
Details:
www.hwca.com
HW is running the Young Entrepreneur of the Year competition for those who have started up their own businesses. Details:
www.hwye.co.uk
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