Business owners have had to deal with a lot of changes since the onset of the current financial meltdown in 2007. Not least being the fundamental way that lenders have had to respond to circumstances by changing, often drastically, their attitude to individual businesses.
I talk to a lot of business owners who are simply confused as to why good, long standing relationships appear to have been replaced by (as the borrower sees it) by a short-term view of the world, often revolving around their last set of accounts.
There is no doubt that we are all going through a re-evaluation of risk. From major High Street players to the quirkiest forms of corporate finance, lenders are looking at their books and planning to reduce their exposure to loss. This impacts businesses in a real way. Access to capital is a critical part of the equation for growth.
Without access to capital businesses will start to alter their own risk outlook. This means not taking on larger jobs, not hiring the extra person etc. There is no way to sugar-coat the fact that starving UK companies of finance will mean an extended period of extremely low (or no) growth.
The Government has recognised this and seems committed to rolling out ever more programmes to try to ease the flow of funds from the centre out. While we have to applaud any initiative that tackles the problem of financing SMEs, I think it is unrealistic to expect these to work in any dramatic way.
Business owners are quickly adjusting to the current climate with a real interest now being shown in financing options that provide long term access to capital while at the same time not requiring levels of security for that lending which, to be frank, a large majority of SMEs are either unwilling or unable to provide.
Hence we have seen an upsurge in interest in Invoice Finance and Pension-Led Funding, both of which leave considerably more control over the funding in the hands of the business owner and, in the case of Pension-Led Funding, can utilise assets in the business that most other lenders will ignore, such as Intellectual Property.
Being agile and quick to respond has always been a strength of business in the UK and we can already see that as the landscape of corporate finance changes rapidly, business owners are adapting to these changes and finding solutions that will allow them to prosper into the future, whatever that looks like.