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Budget stuff  •  Business Services  •  Business Tax  •  eis  •  Personal tax  •  Small Business

Budget 2014 needs to improve access to finance for growing businesses

By Simon Paterson on 5 March 2014

In the coming weeks, publicity surrounding the 2014 Budget will start in earnest and we expect to see a lot of media leaks indicating what George Osborne will be announcing on 19th March. The CBI has already put its stake in the ground to increase pressure on the Government to make it easier for small and medium sized businesses to access funding. They are lobbying for improvements to the Funding for Lending Scheme and a sustained increase in the Annual Investment Allowance (AIA). In The Times this week, RBS was criticised by the Government for failing to do enough to support SMEs after it emerged the bank withdrew £2.2 billion of credit in the last 9 months of 2013. Trying to boost lending to UK businesses is a key Budget issue and we will be waiting with interest to see what George Osborne actually announces.

Our experience is that whilst banks are lending again, they are carefully scrutinising every application; increasingly they are introducing additional conditions before finance is agreed. For instance, covenants are being put in place to ensure balance sheet values remain above certain levels, which of course has the effect of restricting directors’ remuneration rates. They typically also require regular management accounts to ensure these covenants are being met and that the business is being managed efficiently.

Clients are telling us they have renewed confidence in the economy and have optimistic growth plans for their own businesses over the coming year. However finance is essential to sustain growth – for established businesses with a good track record and strong financial management it is easier to obtain funding than it was 5 years ago, however difficulties remain and these are often hampering expansion plans.

Whilst existing schemes like EIS and SEIS enable companies to attract investor funds which don’t rely on the banks, these investments rely on the introduction of additional shareholders which many company owners find unattractive, unless the investor also brings strong and required expertise.

How can your accountant help get access to business finance?

You only get one chance to make a first impression with a lender and this is essential when applying for bank funding. Accountants have a natural role to play in securing finance and can help to prepare a business to secure funding from banks and business lenders in a number of ways. Firstly, they can advise on how to ensure financial operations are being managed efficiently on an ongoing basis, with an eye on the information banks will be looking for. In addition, they can help compile the necessary documentation, e.g. management accounts, financial forecasts and briefing documents showing trading history, to support the application.

To find out more about the different options for obtaining business finance contact Simon Paterson by emailing sp@rjp.co.uk.

 

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In the coming weeks, publicity surrounding the 2014 Budget will start in earnest and we expect to see a lot of media leaks indicating what George Osborne will be announcing on 19th March. The CBI has already put its stake in the ground to increase pressure on the Government to make it easier for small and medium sized businesses to access funding. They are lobbying for improvements to the Funding for Lending Scheme and a sustained increase in the Annual Investment Allowance (AIA). In The Times this week, RBS was criticised by the Government for failing to do enough to support SMEs after it emerged the bank withdrew £2.2 billion of credit in the last 9 months of 2013. Trying to boost lending to UK businesses is a key Budget issue and we will be waiting with interest to see what George Osborne actually announces.

Our experience is that whilst banks are lending again, they are carefully scrutinising every application; increasingly they are introducing additional conditions before finance is agreed. For instance, covenants are being put in place to ensure balance sheet values remain above certain levels, which of course has the effect of restricting directors’ remuneration rates. They typically also require regular management accounts to ensure these covenants are being met and that the business is being managed efficiently.

Clients are telling us they have renewed confidence in the economy and have optimistic growth plans for their own businesses over the coming year. However finance is essential to sustain growth – for established businesses with a good track record and strong financial management it is easier to obtain funding than it was 5 years ago, however difficulties remain and these are often hampering expansion plans.

Whilst existing schemes like EIS and SEIS enable companies to attract investor funds which don’t rely on the banks, these investments rely on the introduction of additional shareholders which many company owners find unattractive, unless the investor also brings strong and required expertise.

How can your accountant help get access to business finance?

You only get one chance to make a first impression with a lender and this is essential when applying for bank funding. Accountants have a natural role to play in securing finance and can help to prepare a business to secure funding from banks and business lenders in a number of ways. Firstly, they can advise on how to ensure financial operations are being managed efficiently on an ongoing basis, with an eye on the information banks will be looking for. In addition, they can help compile the necessary documentation, e.g. management accounts, financial forecasts and briefing documents showing trading history, to support the application.

To find out more about the different options for obtaining business finance contact Simon Paterson by emailing sp@rjp.co.uk.