This month an online survey of small business financing was conducted by a well known auction site. The results were unflattering to UK banks, however, as pointed out in the article, it may not be as simple as getting banks to lend more.
Lending margins (especially for small businesses) seem to have widened (as apparently have collateral requirements),and it may not be easy to convince lenders to relax these requirements within the current economic environment.
While lenders are asking for more, small businesses will also need to see benefit in what they are being asked to provide and will increasingly scrutinise the impact of any borrowings.
Within supply chains, the pressure is likely to increase as those with the ability to negotiate longer payables cycles will force suppliers to find ways to improve liquidity.
Whether commercial banks are able to keep it all flowing, or if this is a space in which commercial financiers and asset based lenders can dramatically increase their activity, remains to be seen.
The banks have proposed their 17 point plan (as mentioned in a previous posting). In addition to their steps, I believe that there are opportunities for entities other than the banks to improve the flow of financing to small businesses.
With a mix of policy measures, education, dialogue and innovation, I am confident that small business financing can be improved. I would like to take a look at some of these in the next few months.