Raising finance to grow your business is not about today, it is about tomorrow. The right finance package can be a positive force within your business, one which can be used to propel your business forward.
Building a bigger, better future… that’s what we do
When you’re looking for finance to grow, a lender will want to see a well constructed Business Plan. A great Plan sets out a clear vision for the future, a future in which you soar above your competition.
Helping business owners soar… that’s what we do.
The whole process of raising finance can be a distraction and divert your attention away from what’s important. With mounting priorities it’s a case of which one has to wait. Typically raising finance is one task that can grind you down.
Making it happen… that’s what we do
No one wants to stay in the same place; it’s boring and monotonous. Growth is much more exciting but getting to the next level takes money and with it a range of financial options to consider.
Taking your business to the next level… that’s what we do
One alternative source of business finance that is growing in popularity is family and friends.
In this clip taken from an ‘Access to Finance’ seminar for the accountancy body, ACCA, Rob Warlow talks about the pros and cons of getting business finance from this source.
Beware!
Posted on 23.01.2014, by Rob Warlow
Face with growing outcries about the continual fall in bank lending, the main High Street banks have launched a new campaign to get businesses borrowing.
The banks, together with the British Bankers Association, are keen to let businesses know they are a lot more likely to get bank finance than they think. The banks, which include Barclays, HSBC, Lloyds, Nat West, RBS and Santander, quote a recent SME Finance Monitor report which says that while only 37% of SMEs planning to apply for finance believe they will get approval from their bank, actual approval rates are a lot higher at almost 67%.
The research from the BDRC survey identified as many as 270,000 businesses that wanted to apply for finance but never actually ended up doing so. It attributes a lack of confidence in their chances of success as one of the key reasons for this.
The message of the campaign is that increasing confidence amongst businesses around lending has the potential to boost the UK economy, as if all of those businesses went ahead and applied for finance this could enable:
The 12-month campaign will be aimed at businesses with a turnover of less than £25million, and working alongside the government, politicians, banks and business groups it will spread the message that SMEs are a lot more likely to get finance than they think.
The campaign, featuring online advertising and social media outreach, will provide top tips for finance success, promote schemes such as business mentoring and showcase examples of businesses that have gone on to grow and prosper after securing a loan.
Posted on 13.01.2014
In this episode of the Business Finance Bulletin Rob Warlow looks at the latest bank lending figures which, when you look closer, shows that banks are beginning to lend more to small businesses.
Rob also looks at the consequences of not diversifying your client base and how this is one area of risk that banks consider when reviewing a business finance request.
Posted on 06.01.2014, by Rob Warlow
The monthly business borrowing figures released by the Bank of England has once again fuelled the ‘banks aren’t lending’ debate but as I mentioned last month (Bank Lending to SMEs Is Falling But That’s Just One Side of the Story) delving deeper into the figures reveals a slightly different story.
The release of the November bank borrowing figures lead to media comments such as ‘bank lending tumbles’ and ‘slump in bank lending’. These headline grabbing quotes was on the back of Bank of England figures which showed that in the month of November alone the total amount of business lending (overdrafts and loans) fell by £4.7 billion.
However, the detail in the numbers doesn’t quite support such a doomsday situation and here’s why.
The monthly reduction figure quoted is the fall in ‘net lending’ – this is the total stock of all borrowing which is the sum of new lending drawn down in the monthly less monthly repayments.
What is happening is that businesses are repaying debt quicker than the banks are lending it back out.
Here are the figures (these numbers only include loans with overdrafts having been taken out in the stats by the Bank of England):
| Month | New Loans | Repayment | Net Lending |
| August | 9.6 | 12.3 | -2.7 |
| Sept | 13.5 | 14.5 | -1.0 |
| Oct | 15.5 | 15.3 | 0.2 |
| Nov | 13.5 | 16.7 | -3.1 |
We can see that in August the banks lent out £9.6b and whilst this increased to £15.5b of new lending in October, the amount of £13.5b in November still compares favourably.
However, new lending is being offset by higher repayments in the month so resulting in a reduction in the total stock of loans. In November new lending of £13.5b was offset by repayments of £16.7b resulting in a net reduction of £3.1b.
These figures relate to businesses of all sizes but the Bank of England also issues figures with the larger businesses stripped out leaving just SME borrowing and these reveal a slightly different picture.
| Month | New Loans | Repayment | Net Lending |
| August | 3 | 3.6 | -0.6 |
| Sept | 3.3 | 3.8 | -0.6 |
| Oct | 4.1 | 4.4 | -0.2 |
| Nov | 4 | 3.7 | 0.2 |
We can see that overall there has been a steady increase in new loans to small businesses. The British Bankers’ Association has quickly pointed out that the new lending to SMEs (totalling £4 billion in November) was 38% higher than the £2.9b seen in the same month in 2012.
Nearly 40% increase! I don’t see this figure being mentioned too much in the media!!
And there is further good news; for the first time in many months, November actually saw a net increase in lending to SMEs of £200m i.e. more was lent out than was paid back.
So, both from a combined position, and for SME lending on its own, the underlying problem is that businesses are paying off debt at a quicker rate than they are taking on new loans.
At a gross level, bank lending does appear to be increasing.
We can argue that banks should be making an effort to lend more in order to get to a positive position each month but should we be too concerned that businesses are paying down debt? We saw businesses gorging on easily available credit during the boom days and quite sensibly they are now focused on paying debt down.
I have talked before about the lack of appetite amongst businesses to borrow and this has been highlighted in a number of surveys. The most recent of these is the quarterly SME Finance Monitor report. In its latest review to Quarter 3 of 2013, they reported that 78% of SMEs classified themselves as ‘happy non-seekers of finance’.
Yes, nearly 80% of those small businesses surveyed said they have had no interest in borrowing over the last 12 months! No wondering that debt repayment is exceeding the total of new loans disbursed.
So, let’s not listen too much to the negative press headlines. Undoubtedly there are some businesses who feel aggrieved at their bank saying no; yes, in some cases banks could be less risk averse; but the bottom line is that there is evidence emerging that lending is on the way up… for those business who actually want to borrow that is.
Posted on 27.12.2013, by Rob Warlow
In the government’s quest to make more finance available to SMEs it has announced its intention to help alternative financiers have access to better information on SME’s credit background.
The commitment to make it easier for newer lenders to assess loan applications via improving access to SME credit data was made in the 2013 Budget. Since then the government has been working with the Bank of England, the Office of Fair Trading, the Financial Conduct Authority, the Department for Business, Innovation and Skills, and the banking industry to investigate options.
If you have read my blogs you will know that when assessing the creditworthiness of small businesses an important source of information for the lender is a business’ past financial performance. The problem is that more in-depth information (outside of that held by the Credit Reference Agencies) is often held by the bank that provides the business’ current account and is not widely shared.
The result of this is that challenger banks and alternative finance providers don’t have access to the same level of information as the bank with which the small business already has a relationship.
The solution being proposed by the government is that banks will be required to share information on their SME customers with other lenders through Credit Reference Agencies (CRA).
The government has opened a consultation period until mid February for industry players and other interested parties to comment. It will be interesting to see the banks responses to the request to share a deeper level of information they hold on their clients.
Posted on 25.11.2013, by Rob Warlow
Latest figures released by the government show that bank lending made through the Enterprise Finance Guarantee Scheme (EFG) has again increased with lending reaching its highest level since 2010.
The figures reveal that banks offered loans worth £111 million to SMEs in the third quarter of 2013 compared to £96m in the second quarter. In terms of loans actually drawn down during this quarter businesses accessed £87m, a slight increase on the £84m lent out in the second quarter.
EFG is a scheme which allows banks to lend to SMEs who would otherwise not receive credit, by providing the banks with a government guarantee for 75 per cent of the loan value. Since May 2010, over 13,400 SMEs have been offered EFG loans with a total value of nearly £1.4 billion.
EFG is offered through 42 finance providers but in the third quarter figures Barclays Bank in particular was praised by consistently offering increased EFG lending since 2012. In the last quarter, Barclays offered nearly twice as much in loans to businesses compared to the same period last year, despite the number of loans offered only increasing slightly.
The increased usage has come off the back of Business Minister Michael Fallon writing to the Chief Executives of the five main high street banks in September 2012 to challenge them to increase their EFG lending after lending continued to fall significantly from the peak in 2009. The combination of ‘naming and shaming’ and a pick up in the economy has no doubt contributed to the increase in scheme usage.
You can find out more about EFG and how it works from here: ‘Understanding the Enterprise Finance Guarantee’.
Posted on 12.11.2013, by Rob Warlow
The banks have long countered the claim that they are not lending with the argument that many businesses don’t wish to borrow. Whilst the banks have to accept they can be too risk averse a new survey has back up their assertion that there is a lack of appetite amongst business owners to borrow.
A new YouGov study finds that almost two thirds (64%) of SMEs have not sought any extra finance over the past two years from banks or any other form of lenders.
The SME Banking 2013 report reveals that that amongst those SMEs that had not obtained additional finance in the last three years, the two main deterrents were not wanting to go into debt (34%) and fears about the economic climate (21%).
The YouGov’s research found the next five factors putting SMEs off from borrowing were,
20% didn’t like the interest rates charged
16% didn’t want to face the hassle of setting up a new facility
12% disliked the terms and conditions of the deal
11% thought they would be turned down and
10% were unhappy with the security demanded by the bank
Looking at the wider picture, the YouGov’s study shows that only 36% of SMEs have looked at alternative sources of finance but 21% have secured funding via crowdfunding and 20% took out leasing/HP agreements. Instead of searching out external finance 18% of business owners have used their own money to fund the business.
The findings of this survey confirm what we have been saying for some time in this blog… more needs to be done to highlight to business owners that there are alternative ways to fund growth other than banks. Also the government must take heed of the fact that a large number of businesses just don’t wish to borrow and so they need to be more selective in the schemes they put in place.
Posted on 06.11.2013, by Rob Warlow
I often hear business owners say there is little help for them to get finance and yet there are a number of schemes out there. So why is it that the existing of the various schemes are not widely known?
This is one finding highlighted in a review on government finance support carried out by the Nation Audit Office (NAO). The NAO has concluded that despite a renewed focus by the government on the challenges facing SMEs in raising finance, there is scope for the range of initiatives to work towards a more unified offering.
The NAO found that schemes such as the Enterprise Finance Guarantee and Start-Up Loans provided direct support to around 5,900 firms in 2012-13, and whilst the schemes are generally performing positively it is felt the profile of the schemes needs to be raised.
The new Business Bank, which is due to be launched in 2014, will be the organisation to bring the schemes together but in the meantime more needs to be done to improve awareness.
The NAO also report found that, at present, although the Department for Business, Innovation & Skills (BIS) and HM Treasury both have teams dealing with ‘enterprise’ policy, there is no formal research programme joining the Departments with other departments, such as HMRC, all of which have an interest in SMEs.
In past blogs we have shared information on lending to SME from sources such as the Bank of England, British Bankers Association, the SME business barometer and yet there is no one single point of source.
It’s as in all things in life… you have to know where to hunt out the right information and of course BLS is one of those sources of information so keep reading our blog!
Posted on 01.11.2013, by Rob Warlow
If you’re in business today then there is no getting away from the message being heavily promoted that ‘banks aren’t lending’ or ‘banks are not interested in supporting small businesses’.
As with all messages, there are always two sides to the story. Regular readers of this blog will know that I have consistently argued that both banks and business owners have equally responsibility in making changes to get to that all too elusive ‘yes’.
The need for both sides to see each other’s point of view has been highlighted in a new piece of research carried out by chartered accountancy firm Kingston Smith LLP in conjunction with the Business Schools of the Universities of Surrey and Greenwich.
The research ‘Bank finance – lost in translation’ reveals a number of key misunderstandings between banks and SMEs which effectively put up barriers when to comes to lending to SMEs.
The findings of the research were based on face-to-face interviews with the senior lending policy makers at five major and challenger high street banks, as well as interviews and focus groups with SME owner/managers, so a well-balanced panel.
The report came up with four key findings.
SMEs’ perceptions of banks’ lending policies are more negative than they need to be
Since the start of the credit crunch the media has been very vocal about the banks’ perceived failure to lend and it’s clear that many business owners have been put off applying for finance because they assume they will be declined.
This negative assumption has been regularly highlighted in the quarterly SME Finance Report and the findings in this latest research confirm this perception is very much alive.
In previous blogs I have said that business owners can’t look back at the past and longingly hope for a return to those days when credit freely flowed. It’s just not going to happen – now is the new normal.
As in any aspect of running a business, persistence is the key. If you are knocked back, find out why, learn from it and make the necessary adjustments to your Business Plan and proposal.
SMEs would benefit from greater clarity regarding banks’ loan application processes
The research found that many SMEs are unaware of, and don’t understand, banks’ loan application requirements.
This finding is focused mainly on access to information on what banks want to see in order to process a finance request. Bank websites on ‘how to apply for a business loan’ were found to vary in effectiveness and ease of navigation thereby putting another barrier in the way of doing business.
SMEs are often unaware of banks’ lending criteria
Perhaps not unsurprisingly SMEs feel that the bank’s loan request assessment process is a black art, something of which they have little understanding.
For example many SMEs are unaware that banks expect them to invest in their own businesses and make a contribution to an overall project cost by injecting a percentage of the funds required. This ‘partnering in the risk’ extends to the provision of some form of security for the loan, whether that be property or director’s personal guarantees.
SMEs also need to be more aware that some banks favour one sector whilst another is less keen to lend into that industry. Where does your bank sit in relation to your sector?
The banks interviewed said they only make loans to SMEs which are considered to be commercially viable and SMEs can improve their chances by demonstrating both a convincing business idea and financial acumen.
The lack of understanding about how banks thinks has been a central theme is all my blogs and videos and was the key reason why I wrote ‘Loan Sharp: Get the Business Finance You Need’.
As in any negotiation, to be successful you need to understand how the other side thinks.
Subsequent to the loan decision, banks’ feedback and support offered to SMEs is often unclear and inadequate
The report is not totally biased towards the banks; one area of criticism levelled at the banks is how they feedback a ‘no’ decision. Whilst the banks said they do provide reasons as to why they are not supporting a request the general consensus amongst business owners was that this is not the case.
I have certainly seen examples of this and banks certainly do need to be more specific in why they are declining a request for finance. If vague reasons are given then it’s more challenging for the business owner to make the necessary changes to convert the ‘no’ to a ‘yes’.
The recommendations coming out of this piece of research is an excellent summary of what both SMEs and banks can do to come closer together.
SMEs should:
Banks should:
Policy makers should:
I wanted to thank you for such an insightful, energetic, and entertaining talk at the Kevin Green Wealth event on securing funding and creating a successful plan. It was brilliantly executed and a pleasure to listen to and the ideas I’ve learned are definitely going to help me in going forward.
Rob delivered a series of 3 workshops aimed at understanding how finance houses look at finance propositions with the aim for us as a team to deliver more of a bespoke offering to our customer base. The training was delivered to a mixture of staff who work with new businesses start-ups and existing established businesses across Mid & South West Wales. Rob delivered the training with an abundance of passion and has really helped my team look at financial propositions in a different light, many thanks again Rob and I look forward to work with you in the near future.
Hi Rob, it was so interesting and entertaining listening to you at the Kevin Green Wealth Coach Workshop in Reading this weekend! I didnt realise you can find Finance proposals such fun!. Brilliant tips! Thanks.
Rob kindly agreed to attend the recent Pontypridd RFC sponsors networking evening and delivered what can only be described as an excellent talk on 5 Tactics to Boost Your Business and Your Profits. He kept the audience engaged throughout and the feedback from everyone was excellent. Rob is very knowledgeable on business and finance and on top of that is a genuine nice guy. We hope to have him back at a future event and I have no hesitation in recommending Rob’s services.
Further to your recent presentation at LEAD Wales just wanted to say it was very refreshing to see somebody talk passionately and positively about finance, very insightful!