Funding for Lending drops but the economy grows - SMEs should consider where their growth finance will come from

Funding for Lending drops but the economy grows

Iain Moffatt, Head of Enterprise for KPMG in the UK, comments on 2014’s fourth quarter drop in lending to SMEs via the Funding for Lending Scheme, as announced by the Bank of England

Also on KPMG.com

Commenting on 2014’s fourth quarter drop in lending to SMEs via the Funding for Lending Scheme, as announced by the Bank of England today, Iain Moffatt, Head of Enterprise for KPMG in the UK, said:

“It’s disappointing to see a £0.8bn drop in debt finance directed to SMEs through the Funding for Lending Scheme, albeit the rate of contraction has slowed compared to the same period in 2013, which is something of a silver lining.

“While positive GDP growth of 0.5% suggests there is at least reason for cautious optimism on the growth prospects for SMEs, this is not yet enough to prompt businesses to race into investment decisions and call on the associated debt finance.

“However, while we want to see SMEs be able to secure finance to fund growth when they are ready to commit to expansion plans, it should be recognised that this won’t - and indeed can’t - all come from the banks.

“Regardless of whether this is due to a lack of appetite from SMEs for bank debt or a mismatch between the risk profile of lending applicants versus the risk appetite of the lenders, it is important that ambitious SME owners consider where their growth finance will come from, and then prepare for in-depth conversations with lenders or investors.

“This can prove to be a major business project, for which busy entrepreneurs are often unprepared. Indeed, a recent study from BMG research shows 37% of businesses give up their search for finance and cancel their spending plans after their first rejection. SME owners should approach conversations with funders armed with robust financial records and forecasts, to ensure they present their investment case in the best possible light.”

- ENDS -

 

Notes to editor:

The Bank of England Funding for Lending Scheme data:

http://www.bankofengland.co.uk/publications/Pages/fls/q414.aspx

 

For further information please contact:

Alison Anderson, KPMG Corporate Communications

T: 0113 254 2980

E: alison.anderson@kpmg.co.uk

KPMG Press office: +44 (0) 207 694 8773

Follow us on twitter: @kpmguk

 

About KPMG

KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 11,500 partners and staff.  The UK firm recorded a turnover of £1.8 billion in the year ended September 2013. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 155 countries and has 155,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity.  Each KPMG firm is a legally distinct and separate entity and describes itself as such.

This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG in the UK.

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