February 3, 2010
Filed under: Business Finance — Alan @ 5:29 am
New research shows that small companies are now using their own resources to fund their organizations since they no longer are able to secure decent credit from banking institutions.
In a survey completed by the Scotland Federation of Small Businesses over a fifth of bosses were forced to turn to their own savings to make it through 2009. Also shown in the survey was the fact that only a third of the SMEs actually used a bank overdraft in order to continue to finance their activities.
The FBS concluded from their study that Scottish firms needed better access to flexible and affordable bank credit.
Out of the 1,200 firms that were surveyed between the months of last September and October, about ten percent said they used personal credit, including credit cards, company credit, or a bank loan but over half of them did actually use these lines of credit during the month of October, which is when the base rate of the Bank of England fell to its lowest point ever.
About 33% reported that bank facilities had changed their interest rates with only about one out of six actually lowering their interest.
Out of the firms included in the FBS survey, only 30% saw an increase in their profits while 47% reported they saw their overall profits plummet.
In terms of expansion, 47% also reported that they planned to keep their business its current size until the recession passed with 32% stating that they planned on about a fifth of future expansion.
January 5, 2010
Filed under: Small business — Alan @ 6:55 am
Leaders of many of Britain’s small companies have stated that the national insurance rate increase attacks jobs and will hinder the growth rate of Britain as it comes out of the recession.
The FSB or Federation of Small Businesses stated that Chancellor Alistair Darling has effectively taken away with the same hand he gave out after he deferred a one pence increase on SMEs corporate tax, but then hiked the contributions of small businesses to national insurance by about half a percent.
The move to defer the corporation tax will help out about 850,000 SMEs, but the move to increase national insurance will hurt companies and increase the rate of unemployment since companies will not be able to afford new or possibly current employees.
Chairman of the FSB, John Wright, stated that the new tax will hurt the UK’s employment rate and that since the unemployment is on the rise it is not excusable for the government to use national insurance tax hikes as a way to get revenue. Instead, Wright stated that SMEs should have been rewarded for hiring new employees to encourage job creation.
The new point hike is on top of a previous rate increase from 2008 that affects all SMEs, their staff, and those who are self employed in Britain. Workers who earn less than twenty thousand pounds a year will be exempt from the tax hike however.
Darling also announced in his pre-Budget report that the Enterprise Finance Guarantee scheme will be offered for another year.
January 2, 2010
Filed under: Small business — Alan @ 5:42 am
Chairman of the FSB (Federation of Small Businesses), John Wright, said that small firms will continue to need aid in the coming year as they launch their recovery plans which will be dependent largely on help from banks.
Wright stated that Britain’s 5m SMEs will have a large role in bringing the UK out of the recession but that they need help in order to get there. Among the aid they will need from the Government, according to the chairman, are measures that will make it easier to hire employees and set up businesses.
He suggested that every jobcentre should have a business manager and systems should be enacted that would help place graduates with small businesses that need qualified employees.
In his New Year message Wright also said that banks need to be more competitive in offering finance options to small businesses. He stated that with the proper confidence and aid the SMEs will in return help provide jobs to those in need which will help boost recovery efforts throughout the UK.
A spokesman for the Department of Business stated that small business will help recovery and the Government has pledged to help the sector out which is why they lengthened the Enterprise Finance Guarantee for another year so that banks will continue to lend to smaller businesses.
Additionally the spokesman said that they are working with the FSB to pair 10,000 graduates with internships at SMEs.
December 18, 2009
Filed under: IT, Legal — Alan @ 8:52 am
SMEs are facing large penalties for failing to follow new procedures that were set in place to protect the credit card details of their customers.
The rules state that all businesses must be able to prove that debit and credit details are kept in a central location that is safe from fraud, such as in an approved electronic database.
However, most small business owners say that they would be happy to follow the rules, if there was more information about how to regulate or implement an appropriate system.
SMEs that are in violation of the rule must pay fines that are around a few pence for every transaction that comes through their store. This of course adds up to a much larger amount by the close of the year.
The main complaint is that the fines are not properly being assessed, with some banks failing to flag the fines, and other businesses facing fines even though they are in compliance with the new regulations.
National chairman of the Federation of Small Businesses John Wright stated that the new measures were put in place to help improve data security but that small businesses were not considered when they were first introduced.
Even more disturbing perhaps is the fact that the banks that provide processing services to UK businesses have full discretion over how much they want to charge SMEs for breaking the rules. Among the banks in the UK that asses fines are Lloyds, RBS, and HBOS.
November 10, 2009
Filed under: Loans — Alan @ 7:12 am
The new 2012 SME charter is aimed at addressing the complaints of both medium and small enterprises to help aid them find finance options despite current difficulties over securing finance.
The new commitment also aims at making strides to fulfil pledges made by Government to SMEs that will ease the constraints on SMEs from the recession and make recovery easier.
Lloyds stated that new charter will aid customers from the Royal Bank of Scotland and Lloyds TSB and will inspire discussions with Government ministers that will encourage all SMEs to getting better access to finance in exchange for agreeing to offer fairer pricing to its customer base who have a turnover of at least £15m.
Currently the group has around 18% of the SME market in Wales and England which places it behind the RBS and Barclays in the marketplace. Earlier attempts by the charter to drive up its SME customer base were limited due to the fact only businesses that were able to offer a turnover of under £1m were considered.
As part of the new charter the group will offer much stronger backup for about 300,000 start-ups and will also increase the amount of seminars that it offers from 120 to 200 per year over the next three years.
The aim of this charter is to provide online and personal guidance for SMEs that are just starting up and need aid with sustainability, finance, and employment.
Lloyds is also offering to guarantee that they will meet the finance needs of every reasonable request from customers that are deemed viable.
November 3, 2009
Filed under: Small business — Alan @ 8:34 am
Wales businesses will soon get a break on their rates, with the announcement that the assembly government plans to decrease the amount many small businesses will owe in 2010.
SMEs were worried about upcoming bill hikes after it was recently evaluated that rateable values would soon rise.
Now the Welsh government is addressing the problem by lowering the rate at which SME’s bills are calculated at.
The Federation of Small Businesses stated that they are pleased with the new announcement and that many SMEs were worried after receiving revaluation notices that stated their bills would increase in the next year from the Valuation Office Agency.
The new rates will be lowered for SMEs from .489 to .409.
Wales’s chair of the FSB, Janet Jones, stated that the organization is welcoming the news but stating that they are still cautious to see what its results are. Jones continued to say that the FSB has worked hard to see a reduction in rates and they are glad to see the Government finally take notice.
A spokesman for the assembly government stated that they were not able to delay the revaluation of property, but can reduce the multiplier to make its results more suitable for business owners.
September 26, 2009
Filed under: Loans, Small business — admin @ 11:08 am
Following the British Government’s rescue of two of the biggest financial institutions, the Federation of Small Businesses in Scotland is now voicing concerns over a strangling domination of the business banking market. In particular, the FSB have made clear their uneasiness over a monopolisation in business credit for small to medium enterprises.
The RBS Group and the Lloyds Banking Group, both having required substantial bailouts and effective nationalisation following poor decisions in business acquisitions, have been accused of forging a duopoly within the Scottish credit sector for SMEs. There is now growing disquiet surrounding the issue of a dilution of credit choice for small business owners when it comes to banking.
Further to the possible ramifications of this for SME, there have been calls for the government to aid the reputation of banks that did not require such high-profile bailouts. The director of Debt Advisory, Neil McDaid, asserted that there was a lingering distrust in banks combined with an inversely anticipated increased loyalty, meaning that the introduction of competitor brands and products in capital lending to SMEs would become increasingly difficult.
He commented: “The availability and cost of bank debt continues to be a problem for businesses, and an obstacle to economic recovery. The lending commitments of the state-owned banks have failed to make a significant impact on borrowers so far.”
Whilst this may prove to provide the groundwork for an analysis of future business lending pending a continued commitment in the wake of economic recovery, there have been warnings that a moderating influence on the release of credit, as displayed by the cautious activity of the Scottish duopoly could be beneficial. Peter Jones has this week spoken with caution about a substantial credit influx, which would result in the perpetuation of toxic debt and debt solutions in companies with poor business models.
“If you open up the doors and credit opens up too fast, all that’s going to happen is the businesses that are going to be saved, on occasion, will be the businesses that probably do not deserve to be around.”
Small to medium enterprises, it seems, are now under increasing pressure to secure credit in an economic environment that neither suitably facilitates negotiation in essential credit nor aids in providing contingencies when dealing with Individual Voluntary Arrangements or Protected Trust Deeds when they struggle to repay inflexible debts they had no choice in taking out.
