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The Government Must do more to Promote SME Finance Schemes

Lack of funding holds back 1 in 4 SMEs

According to the House of Commons Public Accounts Committee (PAC) many small and medium-sized enterprises (SMEs) are not fully aware of the finance loans that can be accessed in order to help them to start up, operate, and grow. With the struggles of Brexit on the horizon, for many SMEs, this could be the difference between sinking and swimming.

The report criticised the Department for Business Innovation and Skills (BIS) and the Treasury for failing to provide adequate information on how SMEs can access funding.

BIS Schemes

The main six existing BIS schemes provide support to more than 6000 firms each year. The Treasury’s Funding for Lending scheme has also provided £17.6 billion of cheaper lending to banks, with the intention that they will pass this on to businesses and households.
Despite this, many businesses are still unaware of, or unable to access, this finance due to a lack of public awareness. As a result, many SMEs are relying on credit cards and overdrafts for financial support.

Margaret Hodge, chairwoman of the PAC, told the Independent:
“Small and medium-sized enterprises have a vital role to play in driving the UK’s economic recovery, but despite government attempts to encourage lending to SMEs, many still struggle to access the finance they need. Departments were therefore unable to demonstrate that they are achieving best value for taxpayers’ money.

Automation is a key opportunity for increasing productivity within your business. Making use of these accessible loans could make automation an even more viable solution for your factory. On top of this, many of Active8 Robots’ solutions have a short payback period of just 18-24 months, meaning that the loans need not be long term.

funding options

Be sure to contact the Active8 Robots team if you think an automated solution could be what your factory needs.

 Tips for Accessing Funding-

  1. County Councils

Harang your county council, ask them what they are doing to help, they will often have schemes and events to bring companies and financers in their region together, but these are often poorly advertised. For example, Greater Manchester have the service.

  1. Asset finance

Financing automation can be particularly attractive to asset financing companies.  In general the lending is against the value of the object being purchased.  The value of other assets already on the balance sheet can also be taken into account to reduce risk further. Another option might be for the finance company to lease the assets to the applicant until their value is paid, when a final payment transfers ownership.

With this form of financing, the lower the risk to the lenders the lower the cost of borrowing. If you have assets on your balance sheet that could help you raise finance this may be worth considering.

  1. Equity finance

This that you are selling shares in your company to inject funds. Equity finance is typically used by fast growing companies to finance investments that have a longer-term return. Equity investments are typically available to the company for the long-term and, unlike debt finance, are not paid back.

4. Crowdfunding

Crowdfunding is all the buzz in startup circles, but it’s also being used by small businesses to expand. According to the crowdfunding platform Kickstarter, $349 million has been successfully pledged and invested in projects on that site alone. With some intelligent marketing you have the ability to get your idea in front of hundreds, even thousands of potential backers.