A muddled landscape

Spring was a busy time for Government initiatives trying to get funds into the hands of the UKs small and medium sized businesses.

In April the Business Bank opened its doors, making available the first £300m of a potential £1bn earmarked for investment in the SME sector.

Hot on its heals came the news that the Funding for Lending Scheme, meant to encourage banks to free up the flow of money into these same businesses, was faltering.

At the same time a survey from the Federation of Small Businesses revealed that there are no less than 800 grant schemes targeting small businesses at the local level throughout the country and 18 national grant schemes currently operating.

While I have long argued that it is not the job of government to try to run business, I would also argue that it is the job of our nation’s lawmakers to direct policy and to make sure that there is as little impediment as possible to discourage the entrepreneurial spirit that has made our economy so vibrant.

Both the Business Bank and the Funding for Lending Scheme have serious question marks hanging over them. Long term funding for the Business Bank is far from assured and high street banks have not yet been encouraged to pass on the cheap funds they have been drawing on.

The grant application process is complicated and time consuming and often perceived to be out of reach for many business owners.

Although Dr Cable has championed small business during his reign as Secretary of State for Business, Innovation and Skills, he seems unable to deliver a big, bold and broad template for UK business. In this fragile environment where recovery is far from guaranteed, big thinking is needed.

This does not mean that Dr Cable should adopt a “nationalise the lot of ‘em” approach to the funding community, rather he should try to unpick the muddled landscape of business finance and help businesses identify their options such as pension-led funding (and there are more options springing up all the time).

He needs to educate the business community by endorsing a joined-up approach which would give UK business owners comfort that the Government was committed to using their good offices to help business get back on its feet.

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