72 roundtable: economic recovery
With UK SMEs widely regarded as the engine-room for economic recovery it is important to discover if they are ready for growth, or burdened by difficulties such as lack of funding, skills, professional support, or confidence. This Roundtable hosted by The Business Magazine together with the sponsors and co-compilers of our SME 100 – Santander bank, law firm Field Seymour Parkes, business advisers and accountants Haines Watts and SME growth advisers VitalSix – set out to find the answer ...
Are SMEs ready to drive a ‘UK plc’ recovery?
Participants
Fred Edwards: GTK, electronics manufacturing
Susan Elliott: Director – VitalSix
Penelope Garden: Partner - Field Seymour Parkes
Chris Houston: MD – QV Offices
Ian Nash: Business development director Thames Valley – Santander
David Podger: Thames Valley Training & Development
Nikki Singh-Barmi: MD – GRITIT, winter risk management
Bill Smith: FD, STL Communications – business communications solutions
Lined up to debate: our roundtable team Journalist John Burbedge reports the roundtable highlights
How’s bank funding in the Thames Valley?
Banker Ian Nash reported a positive outlook. Santander’s Breakthrough Fund, a £200 million mezzanine interest-only debt fund created as a growth solution for sub-£10m turnover SMEs, had been doing more finance deals recently, particularly in the Thames Valley. “To me, that shows there are businesses out there now looking beyond their internal strictures and seeking to expand into other markets, or grow a new product line, or take on personnel.
“Over the past three months, there have been a lot more people willing to talk to us, and it’s not about refinancing their existing debts. They are looking for growth funding options, something better, more innovative, that will help their business in the longer-term.”
Even so, David Murray queried if there was a general reluctance to borrow among SMEs, which might be hampering UK economic recovery.
Nash admitted: “There are a lot of businesses who are still internally focused. They may have good management teams and want to kick on, but are still uncertain about what may lie around the corner.” He also feared that all banks were still being tarred with the financial mistakes of the past.
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Susan Elliott, exampled a retail sector client in his first year, set to turnover £1m. “He is anxious that his expansion plans are adequately funded, but he is probably too early stage to be a bank customer.” (Vital Six is helping him gain funding through the Thames Valley Berkshire LEP ‘Funding Escalator’ scheme.)
Sean Taylor: “Some banks feel that removing commercial property transactions from the equation they are lending at a pretty consistent rate, and feel it’s unfair they’re taking so much flak.” His company had recently taken out traditional bank funding to buy its own offices.
Elliott: “SMEs also need to understand why some banks may not provide lending; it may not be what their business actually needs. There’s an education piece needed on the right type of funding for different stages of businesses. Sometimes, for instance, you might be looking at a mix of different funders.”
Funding through a crowd
in the cloud? Nikki Singh-Barmi pointed out that a mix of funding could often help a business to balance its overall finance costs better.
Elliott: “We have a few clients who have secured finance through online crowdfunding platforms (online loans funded by thousands of individual investors).
Sean Taylor: MD – Redwood Technologies, cloud software specialist
Jane Wills: Partner - Haines Watts
David Murray: Managing editor and publisher of The Business Magazine, chaired the discussion
Ian Nash
Fred Edwards said one of the companies he worked with had considered crowdfunding through the Funding Circle. He also mentioned the funding success of the Government’s Enterprise Investment Scheme with its tax benefits for investors.
Chris Houston said he had never used external funding, but might explore the crowdfunding option to grow his businesses.
Elliott: “I believe the Funding Circle has 100% success on projects funded, and only has 1.5%
THE BUSINESS MAGAZINE – THAMES VALLEY – SEPTEMBER 2013
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