NACFB: The long game

The long game

Start Up Loans and why early support can pay dividends

Jenny Barrett Communications Consultant NACFB

Alack of understanding about and signposting to Start Up Loans emerged as one of the key discussion points during the panel session at the NACFB’s first in-person event of the year. Part of the Funding Future Growth series of regional events, last month’s session examined London and the South and brought together Members and Patrons alongside regional senior managers at the British Business Bank, Susan Elliott and David Woods.

An opening panel session sought to enhance brokers’ understanding of SMEs operating in the capital and across the South of England. Almost from the off it became clear that attendees wanted to learn more about Start Up Loans so that they could more effectively engage with businesses that were not yet able to take up commercial finance, realising that signposting them in the right direction now could pay dividends later. Supporting clients, is after all, a long, long game.

Perhaps one of the most important things about the Start Up Loan scheme we learned was that although unsecured borrowing is limited to £25,000 per founder, this borrowing can be utilised by up to four founders/directors which means that start-ups can potentially access £100,000.

The session also covered access to finance in a broader sense and it was agreed that many SMEs simply do not know about the range of options available to them. Susan Elliott directed brokers to the British Business Bank’s Finance Hub where among the roster of over 180 accredited delivery partners there are at least 30 NACFB Patrons. She said: “It’s an important part of our role to hear directly from finance brokers on the ground about what their clients are experiencing when accessing finance for new projects, growth, and investment in assets. We can then use their feedback to support the Bank’s work to continue to break down barriers for smaller businesses seeking funding.”

Brokers did raise their frustration at being unable to refinance or secure additional finance for SMEs with existing government-backed loans in place, especially where lenders had taken a debenture. Brokers felt that having to repay the government scheme first not only hindered an SME’s ability to grow, but ironically, reduced cashflow. Clearly, this will be a debate that rumbles on and could prove to be a difficult issue for lenders to resolve.

When discussing the regions more broadly, a mixed picture emerged. Susan Elliott cited the Oxford area, with its focus on information technology and life sciences, as a place where many SMEs are flourishing. At the other end of the scale is, perhaps, East Kent which is home to more traditional businesses many of which are still struggling in the pandemic aftermath, dogged by supply chain issues as well as rising costs and inflation.

This sentiment was reflected in conversations with Members, with one sharing that some clients had stepped up activity, keen to secure rates before they rose, whereas others were looking to get out of property investment or shut up shop altogether.