Funding Options business finance review

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Slides from Conrad Ford's speech at the Real Business Funding event on March 15th 2013 at the British Library

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Funding Options business finance review

  1. 1. 13/03/2013 Business finance update
  2. 2. Agenda •What‟s really happening? •What might actually help?
  3. 3. Finance falling fast, only question is why Quarterly change in lending to SMEs (6%) (4%) (2%) 0% 2% Mid 2011 to Mid 2012 “Not sustainable” “Confidence issue” “Banks not lending” “Poor business skills” ?
  4. 4. It‟s the „big 5‟ banks fault, right? A new and objective measure... „Big 5‟ Banks (53%) Others (47%) Share of secured lending activity 2011 ...be wary of claims you read in the papers „Big 5‟ Banks (53%) Others (47%) 2012
  5. 5. What about the other lenders? Retrenching quickly overseas Currently small but growing quickly In 2013, all about the exit of ING Much- hyped, spike in defaults = = = =
  6. 6. More funding choice than you might think Around 30 commercial mortgage providers More than 30 asset finance providers More than 50 invoice finance providers
  7. 7. Agenda •What‟s really happening? •What might actually help?
  8. 8. Banks talk about their information challenges: SMEs need to listen more “Not even clear about how much they want to borrow & what it is for” “Lack of evidence of a customer’s ability to repay loans” Anecdotal Data From recent press statements and the BRDC SME Finance Monitor • Less than 40% have management accounts. • Less than 30% have a written business plan.
  9. 9. The dominant banks need to get behind trusted advice for SMEs “Helping high growth businesses raise investment and obtain business finance” “Accredited accountants familiar with business finance options, will offer advice”
  10. 10. A need for policy focus: most viable firms simply don‟t have a problem “Focus on micro- business financing, longer-term & higher risk applications” “More beneficial to SMEs if it was focused only on business lending” On the „BIS-ness Bank‟ On „Funding for Lending‟ Sources: March 2013 FSB press release and comments by Steve Pateman to The Times
  11. 11. Tragically, working capital-hungry growth firms are most poorly served Financing Working Capital Personal(!) Credit Cards & Overdrafts Factoring & Invoice Discounting Disguised Recent Example • Growing business with turnover ~£200k • Landed a significant new partnership • Needed £50k to purchase specialist equipment • Invoices the main asset of the business • Minimum fees alone ~15% of finance facility One million firms
  12. 12. Rapid technology changes mean far more hope for the near future New online financial world… (global users) Example 2012 2011 …of connected data “Connected services support business functions ...financial, ops, sales” “Connected services... builds on the company’s position in cloud”2010
  13. 13. Thank you “Makes multiple financing options easier” “Quick, automated application & selection” “Access to the right finance products & providers” “Supporting small firms.. a wide range of finance”

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