Why SMEs still face challenges to access finance from banks

CYBG makes £6 billion available for Britain’s SMEs over the next three years, as businesses struggle with access finance from banks.

CYBG PLC, owner of Clydesdale and Yorkshire Banks, is making a minimum of £6 billion of lending available from 2017 to 2019 to help fuel the growth of small and medium sized businesses in the UK. The Bank’s long-term commitment to lending includes significant amounts of finance available across the

UK economy through 2017

£1 billion available to support the day-to-day finance needs of SMEs.

£350 million targeted at providing facilities for medium sized businesses seeking finance for growth
up to £200 million in lending available to SMEs in the agriculture sector supporting the UK’s rural economies.

£650 million available to support our other key sectors that provide lending for major property purchases, financial services and the UK’s industrial base.

The commitment comes as new research conducted on behalf of CYBG, suggests that 35 per cent of SMEs continue to find accessing finance from banks a challenge. In addition, 9 per cent of SMEs said that accessing finance is either very difficult or almost impossible.

The survey also reveals that SMEs identified an increase in the availability of finance as the most important factor in their region which could help them grow and prosper, with 41 per cent of SMEs say it is the most important development in their region.

Following the successful listing of CYBG as an independent Bank in 2016, the Bank’s core SME business returned to growth for the first time in five years in 2016, growing by 6.1 per cent overall, with new loans and facilities granted growing by 15 per cent, in the year ending 30 September 2016. The Bank’s SME business is focused on firms based across the UK’s regions, with more than 90 per cent of SME lending focused on the UK regions outside of London.

The research also highlights 41 per cent of those businesses based in the regions – outside of London and the South East – believe they do not have access to finance on an equal basis to businesses located in London. This underscores the critical role that banks focused on the UK’s core regional economies play in supporting economic growth.

What businesses want

The survey also indicates that of those SMEs seeking finance from a bank:

24 per cent intend to use the finance to hire new staff
20 per cent plan to invest in new infrastructure or capital equipment
20 per cent plan to buy or refurbish premises
18 per cent would use new finance for working capital
9 per cent say they would invest in Research & Development.

Gavin Opperman, group customer banking director, CYBG, comments, ‘With our rich and longstanding heritage across core regional economies, we recognise the important role local businesses have in forming the backbone of the UK economy, by providing employment and financial security for business owners and their employees. CYBG has been acting as a regional economic champion for over 175 years and we have a history of supporting businesses at critical moments in their growth.

‘Our focus on developing lifelong relationships with our customers via our business banking centres and regional managers means we have developed the expertise to understand the varying challenges businesses face at different stages in their life cycle. With more than £2 billion in funding available in 2017 and £6 billion over the next three years, CYBG is proud to finance the innovation and creativity of small and medium enterprises across the UK.’

Margot James, small businesses minister, comments, ‘Today’s announcement from Clydesdale and Yorkshire Bank will be welcome news for SMEs across the country that want to access the finance they need to grow and prosper.

‘Supporting business to grow is one of the ten pillars of the government’s Industrial Strategy Green Paper and we are committed to creating the right conditions for SMEs to thrive as part of our plan to build an economy that works for all. I am especially pleased to see that 90 per cent of this credit facility is destined for businesses outside London and the South East, with a focus on Yorkshire.’

Tom Riordan, chief executive, Leeds City Council, comments, ‘Small and mid-sized businesses are a central part of our economic growth story, employing hundreds and thousands of people across every sector. Access to finance is a critical part of helping them to grow and play an even bigger part in the local economy, so I’m pleased to see Yorkshire Bank’s continued commitment to increase lending to them, particularly here in their Yorkshire heartland.’

Further reading on access finance

Useful link: – Looking for funding? Find the right finance for your business here

Owen Gough, SmallBusiness UK

Freddie Halvorson

Owen was a reporter for Bonhill Group plc writing across the Smallbusiness.co.uk and Growthbusiness.co.uk titles before moving on to be a Digital Technology reporter for the Express.co.uk.

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