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The Futureâ&#x20AC;&#x2122;s Looking Bright for SME Lending S eptember 4, 2013

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Ultimate Business Ca sh Facebook The poor economic environment and impact of the banking crisis has impacted on many busines sesâ&#x20AC;&#x2122; confidence and a knock on effect on their appetite for s eeking bank finance. That s aid, in recent months there have been s mall s igns

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that confidence is coming back. However, whils t the debate continues as to the extent to which demand and/or s upply is s ues are contributing to lower

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levels of lending to S MEs . The emergence of new and alternative lending s hould put this debate to res t as we continue to monitor the S ME bus ines s borrowing trends . The BDR C S ME F inance Monitor s ugges ted that in Q2 2013 whils t S MEs indicated flat profitability, they grew in the pas t 12 months and forecas ted further growth in the next 12 months . The report als o s ugges ted that that whils t many S ME bus ines s es s till felt that the economy is the primary barrier this is mentioned les s in the lates t quarter. However, the Britis h C hambers of C ommerce increas ing their growth forecas ts from 0.9% to 1.3% may impact this moving forward. The BDRC Finance Monitor s ugges ted that the percentage of S ME bus ines s es that have s een growth in the las t 12 months had increas ed from 39% in Q1 2013 to 44% in Q2. We can als o take s ome additional confidence factors from the report with 51% of S ME bus ines s es s ugges ting that they would s ee growth in the next 12 months , an increas e of 3% agains t the previous quarter.

Impact of Credit Reference Agencies We s hould als o note that C redit R eference Agencies play a big role in the trade as s ociated with any company, whether it is s ourcing of bus ines s loans or obtaining s upplies . Therefore it is s lightly concerning to note that, whils t fewer S ME bus ines s es reported credit is s ues (c.10%), the lowes t level s een to date, the volume of S ME bus ines s es that were agencies reached t levels This could be another cons idered â&#x20AC;&#x153;wors etheir thanhighes averageâ&#x20AC;? by .the credit reference

root caus e to the lack of confidence / demand for finance.

New Kids on the SME Financing Block Availability of funds including of business loans and overdrafts provided by banks have continued to be a major talking point amongs t the government and the media and with 24/7 availability of news , will have als o contributed to confidence and appetite to lend. Inevitably impacting on S ME bus ines s es ability to reinves t and grow. Therefore the government has s ought to counter this by offering initiatives s uch as the F unding for Lending S cheme and alternative methods of finance which have s tarted to emerge. The emergence of alternative lending will inevitably help S MEs to s ource new methods of finance, the ability to s ervice their working capital needs and inves tment requirements and to s ource the much needed bus ines s finance that will allow them to reinves t in their bus ines s es and realis e their full potential. We s hould note that larger companies have traditionally had acces s to complex s yndicated finance facilities and bond markets which have enabled them to continue to put the competitive s queez e on the s maller bus ines s es . However, thes e facilities can take time to obtain, s ometimes weeks or months and they are often s ubject to tough covenants . Therefore with the new alternative lending facilities s uch as s hort term bus ines s loans available from the likes of Ultimate Business Cash the ability to react is now in the

hands of the S ME bus ines s owner. This s ugges ts that the future for S MEs is bright.

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