Financial Services Need to Keep SME Confidence Up

27th March 2018.

Confidence among small businesses is picking up after a gloomy 2017, with companies reporting improved trading and fresh plans for expansion and investment.

It’s been a difficult year for SMEs, with the deadly combination of high business and interest rates, as well as tough inflationary pressure. Finally, it looks as if small business confidence is on the rise as inflation finally falls and the Prime Minister appears to be making progress with Brussels. According to a new survey by the Federation of Small Business (FSB), more than seven in ten companies expect their performance to improve, or remain the same, in the next three months. Only one in four lacked confidence, losing the damaging uncertainty that has hung over the heads of businesses since the 2016 referendum.

Most importantly, one in three business owners interviewed in the survey expressed interest in increasing investment. The affordability of finance is deteriorating, with high costs of credit and tough interest rates making it harder for business owners to approach lenders. If small businesses are going to maintain this positive sentiment they must grow, and fortunately, there are alternatives to borrowing. At the Credit Protection Association, our debt recovery services provide our members with the extra cash they need to improve their business, whether it’s renovations or a tightened grip on technology.

The upbeat tone among companies in the opening months of 2018 is in contrast with the mood last year, when confidence declined in each quarter.

The FSB, who conducted the research, promotes the interests of small companies and the self-employed. It is one of Britain’s biggest employers’ groups. Established more than 40 years ago, it is a non-profit-making and a non-party political organisation.

Mike Cherry, the body’s national chairman, said: “After a 2017 dogged by spiralling prices and political uncertainty, it’s good to see small business confidence back in the black.”

The proportion of applicants describing credit as “unaffordable” hit a two-year high in the first three months of the year, in the wake of last November’s interest rate rise, the first in a decade

Small and medium-sized businesses are the lifeblood of the economy and in recent years their role in the economy has been threatened by high fees and tough competition. Now that Brexit talks are headed in a positive direction and businesses have a clearer view of what’s over the horizon, small business confidence is finally up. This isn’t enough to sustain their role in the economy, however, and financial services need to dedicate themselves to keeping their budding prosperity in full bloom. While high street lenders have, traditionally, been approached for finance, recent banking scandals and tough credit conditions have forced business owners to seek alternatives.

While modern finance platforms such a crowdsourcing and peer-to-peer lending offer something different, they demand too much in return. At the Credit Protection Association, we offer our members a multitude of credit management and debt recovery services to recover extra cash to build up their business, while our credit reports and company directories ensure our members are prepared for any further economic or professional dips.