The Government’s BEIS Select Committee has launched an inquiry into SME Finance supply chain bullying and small business productivity.
Commenting on the launch, Stephen Pegge, Managing Director of Commercial Finance at UK Finance, said “SMEs play a key role in driving innovation, productivity, employment and economic growth across the UK which the finance sector is committed to supporting. The finance industry has undertaken a series of significant initiatives in recent years, improving both service and standards while also enhancing SMEs’ access to finance, resulting in more than eight out of 10 SME applications for bank finance now being approved.”
“UK Finance is also working with the regulator, parliamentary and business groups to ensure disputes between banks and SMEs can be resolved quickly and fairly where courts are not the most appropriate route.However, the industry knows that trust and confidence can be improved and we look forward to working closely with Treasury and BEIS to ensure SMEs continue to get the best possible deal, helping safeguard their future growth.”
In response, Federation of Small Businesses (FSB) National Chairman Mike Cherry, said “It’s great to see parliament announcing new cross-party investigations to tackle the many issues facing small firms today.”
“The collapse of Carillion provides a mere glimpse of the pernicious supply chain bullying culture which is sadly rife among big corporations. Taking forward FSB recommendations for ending a late payment crisis that causes 50,000 business deaths a year should be the BEIS inquiry’s top priority. What we can’t have is another Carillion scenario in future.”
“Small firms account for 99 per cent of the UK business community. The solution to closing our productivity gap lies in incremental output gains among small firms and the self-employed, not headline-grabbing initiatives from big multinationals. We look forward to working with the BEIS committee on routes to upskilling small businesses and encouraging them to innovate and invest.
“From the staircase tax, to GRG, to cash machine cuts, the Treasury Committee has been vocal on the issues that matter to the small firms in recent months. As it launches this new inquiry, the Committee is right to flag the absence of regulatory reform around small business lending since the financial crash. That’s despite hundreds of entrepreneurs being driven to the wall by banking scandals during the downturn. The FCA’s most recent set of recommendations for increasing small business access to redress fall well short of the mark. We encourage the Treasury Committee to keep the pressure on regulators during this inquiry.
“Only one in ten small firms currently applies for external finance. The majority of small businesses rely on traditional loan or overdraft facilities from banks, even though they may well not be the right products for them. We need to get more small firms thinking about all of their options while breaking down misconceptions around equity finance. We look forward to working with the Treasury Committee to scrutinise these issues in the weeks ahead.”