On 5 September, Business Secretary Andrea Leadsom met with senior representatives of Britain’s leading banks and other lenders to discuss how best to support the UK’s SMEs ahead of Brexit on 31 October.
During the roundtable, the government launched a new Business Finance Council which will be chaired by Ms Leadsom, alongside Economic Secretary to the Treasury, John Glen, and made up of those senior representatives already alluded to.
The principle purpose of the council is to ensure finance continues to flow to those businesses that need it, as well as to identify and address barriers to funding that SMEs are experiencing.
This, it is hoped, will assist businesses to deal with any challenges or take advantage of any opportunities that may arise as a result of leaving the European Union.
Ms Leadsom seized the opportunity to remind lenders of the existing guarantee schemes available to them via the government-owned British Business Bank and urged them to make the most of this support.
The availability of this important resource should give lenders the confidence they need to encourage their SME customers to invest in capital, increase export capabilities and better manage cashflow.
There is currently approximately £300 million of further ‘headroom’ available to lenders this financial year through the British Business Bank’s Enterprise Finance Guarantee (EFG).
The EFG facilitates lending to viable smaller businesses that lack sufficient security against which to borrow, potentially turning a ‘no’ from a lender into a ‘yes’.
The Economic Secretary to the Treasury, John Glen, said: “SMEs are crucial to the economy and I want to make sure they are fully prepared as we get ready to leave the EU.
It’s vital that businesses engage with their lenders ahead of Brexit and the new Business Finance Council will ensure government, banks and other lenders work together to help SMEs access the finance they need.
As the City Minister, I will be working closely with lenders to make sure businesses can seize the opportunities of Brexit and continue creating jobs, growth and prosperity for the country.”
Longer-term, there is approximately £1 billion of additional guaranteed headroom currently available and uncommitted under the Bank’s ENABLE Guarantee programme.
ENABLE Guarantees reduce the amount of regulatory capital that participating lenders must hold to facilitate their loans to small businesses, meaning that they can provide more lending as a result.
Martin Williams, Partner at George Hay, said: “Without a doubt, Brexit has clouded many businesses’ long-term visions with uncertainty.
Until the finer details are ironed out, we simply cannot say how a post-Brexit Britain will impact upon businesses.
We understand that this in itself makes it extremely difficult for business-owners to make plans for and important decisions about investment, for example.
That being said, there are steps businesses can take to at least better understand the financial position that they might find themselves in after 31 October.
As a starting point, SMEs could benefit from opening up discussions with their banks about credit and debt facilities. Despite banks and lender’s willingness to help those smaller enterprises at present, any negative economic impact will surely have some impact on their ability to lend.
Readying themselves financially, for what Brexit may bring, is an important step that all businesses have the capacity to take.”
How can George Hay help?
A large proportion of our client base is made up of small, local businesses and this is an area in which our team has a particular wealth of knowledge. We work across a vast range of industry sectors and we understand the issues facing you, as a small business owner, today.
We can produce regular, timely management accounts so that you will have key data to hand, to aid you in making informed decisions that will ultimately drive your business forward.
In addition, our team can assist you in preparing forecast information, against which you can measure your business’s performance.
We can also assist you with carrying out and maximising the benefits of a risk evaluation (or Company Health Check); helping you to identify strengths and weaknesses so that informed short and long term strategic plans for your business can be formulated.
To discuss your circumstances in more detail with one of our professionals, or to find out more about how we can support small businesses, contact us today.