Credit Management November 2018

SMES appear unwilling to borrow
ALMOST two thirds of UK small- and
medium-sized enterprises (SMEs) are
not willing to borrow money to fund the
expansion of their business, amid ‘subdued’
attitudes towards external financing,
according to the latest ‘BDRC SME Finance
Monitor’.
Just 34 percent of SMEs were using
external finance in the second quarter of
this year. During the same period last year,
38 percent of SMEs said that they were
using external financing.
However, although fewer SMEs are
seeking funding, the approval rate for
funding applications is rising. By the end
of August 2018, 85 percent of business loan
applications were approved, compared with
78 percent by the end of August 2017.
“The latest data continues to show a
clear trend that demand rather than supply
issues are predominately contributing
to continued lower levels of lending to
SMEs,” says Keith Morgan, Chief Executive
of British Business Bank. “This suggests
smaller businesses could benefit from
being encouraged and enabled to seek out
the finance best suited to their needs.”
High Street banks remained the primary
source of SME funding, according to the
BDRC report, with 67 percent of loan
applications made to a main bank. Only
17 percent of applications were made to
another existing provider, while just seven
percent were made to a new provider. Four
percent of loan-seeking SMEs chose to
use an online platform, while five percent
went ‘elsewhere’. The BDRC data suggested
that SMEs are not being put off by the
scarcity of financing options, with just five
percent indicating that access to finance
was a major barrier. Legislation and red
tape, political uncertainty and the current
economic climate were instead listed as
the major hurdles to business growth by
British SMEs. bva-bdrc.com/products/smefinance-monitor
Future leaders struggling to cope
THE latest Aldermore Future Attitudes
study has revealed that a third (33
percent) of bosses at UK small and
medium-sized enterprises (SMEs),
equating to 1.81 million firms with fewer
than 250 employees, have personally
suffered from anxiety, depression or
another kind of mental health problem in
the past five years.
The report, which surveyed more than
1,000 business decision-makers across
the UK, found that of those business
leaders who have struggled with poor
mental health, over three quarters (78
percent) believe this has affected their
ability to work effectively. A further three
fifths (61 percent) also admitted that
their involvement in their business was
a factor that contributed towards their
problems.
The most common catalyst for mental
health issues amongst SME bosses was
a loss of business revenue or decreasing
profits (40 percent). This was closely
followed by key debtors not paying on
time (30 percent) and insufficient working
capital (29 percent). Aldermore’s figures
show an average of 28 working days are
lost every year, equating to over 185 hours
for each SME. Despite this, almost a
third (30 percent) of UK business leaders
believe that their organisations do not
provide adequate mental health support
in the workplace. Nearly two in five (37
percent) also think the Government could
do more in this space. aldermore.co.uk
The most common
catalyst for mental
health issues amongst
SME bosses was a loss
of business revenue
or decreasing profits
(40 percent). This was
closely followed by key
debtors not paying on
time (30 percent)
>NEWS
IN BRIEF
MAKING ITS MARC
GOLDMAN Sachs has made its UK retail
banking debut through its Marcus digital
banking brand. Marcus – named after
founder Marcus Goldman – offers an
interest rate of 1.5 percent, which apparently
represents the best rate on the market, and
has a minimum saving level of £1.
marcus.co.uk
New Director
IRISH peer-to-peer platform Initiative
Ireland has appointed Brian Ó Nualláin
as Director of Investment and Wealth
Management. He was previously Business
Development Director for Ireland at
Aviva Investors. Initiative Ireland sets
up syndicates of loans for P2P lenders to
fund and back residential development
projects. In December 2017, the platform
raised €1.5 million for a loan to North
Strand Five Lamps for a development in
Dublin – said to be the country’s largest
P2P loan to date. The firms said its senior
debt fund, which has an initial target raise
of €35 million (£31.2 million) and a cap of
€150m, will finance additional loans via the
company’s syndicated finance platform.
initiativeireland.ie
Crypto regulations
THE Government needs to introduce
new regulations to protect investors
from crypto-assets, the Treasury Select
Committee says in its latest report. The
report states the two major concerns for the
Committee are initial coin offerings (ICO)
and money laundering. It also argues that
the Government needs to decide whether or
not it wishes to encourage the asset class
to grow, as new regulations would both
protect and attract investors to develop
their portfolios. The report highlights the
dangers of ICOs which have exposed a
regulatory loophole and needs amending
promptly. Currently, it appears there is little
the FCA can do to prevent investors from
being defrauded or suffering significant
losses other than presenting the risks that
the individual is exposed to. Due to ICOs
falling outside of the regulatory perimeter,
the committee encourages the Regulated
Activities Order (RAO) to be updated and to
include ICOs as ‘a matter of urgency’. This
process would involve recognising ICOs as
a regulated activity and that a body such as
the FCA monitor such activities. This has
previously been done with crowdfunding.
brc.org.uk
At a cost
A report from Citizens Advice shows that
loyalty to providers of essential services
including banking, insurance and telecoms
is costing consumers more than £4 billion a
year, with the charity raising the issue with
the Government’s Competition and Markets
Authority. citizensadvice.org.uk
The Recognised Standard / www.cicm.com / November 2018 / PAGE 11