Lessons from Europe

I would like to refer you to an excellent article on the Financial Director website. Titled “A gateway to better lending – learning from the German model“, the article coherently describes the considerable and structural differences between the UK’s “Big Global Bank” model and the German focus on regional and even local banks to support their small and medium-sized business sector.

It is not a surprise to any of our customers that more than 25% of business overdraft requests are turned down and similarly 34% of business loan applications in the UK end unsuccessfully.

One commentator in the article says: “I think we can take it for a fact that SMEs face huge difficulties”, an understatement indeed. When you factor in recent figures showing that loans to small businesses fell again in December by £1.2bn to a 12 month low, it really does feel like we are going backwards.

So, initiatives such as the one I have personally been championing – an exchange that can signpost appropriate alternative funding options – seem to me not just to be relevant, but critically important.

As the brave folks on the central square in Kiev have found to their wonder and joy, sometimes when the system can’t provide what the people need, you just have to get out there and change the system itself! Now I am not naïve or arrogant enough to claim association or partnership with the ‘heroes’ of Kiev, but I will suggest that a month or two ago hardly any of them could have guessed that the power of their collective action would have generated such extraordinary change.

A humbling lesson for those of us involved in the growth of alternative business funding.

I hope sincerely that we can, in our own modest way, effect some real change in this area for small and medium-sized businesses.

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