Small business lending slows.
Operations Director, James Salmon, 19/02/2019.
Small business lending slows as net lending to small businesses decreased by £200m last year whilst the growth of alternative forms of funding for SMEs also slowed, new studies indicate.
According to a new report from the British Business Bank, net lending to SMEs fell from £700m in 2017 to £500m in 2018. Peer-to-peer lending and asset finance also slowed, with peer-to-peer SME lending rising by just 18% last year, compared with 51% in 2017, as analysts blame the figures on a Brexit-related downturn in economic certainty.
Uncertainty regarding the the UK’s EU withdrawal agreement continues to have a negative impact on the economy, with the Bank of England revising UK growth forecasts down from 1.7% to 1.2% for this year— marking predictions for the country’s weakest economic expansion since the financial crisis of 2009.
Rising concerns of the future of the British economy means many lenders are reassessing their policies. Brexit, stalled growth, rising insolvencies, low business investment, and rising bad debts mean many lenders are becoming more cautious.
Funding Circle, the darling of the peer-to-peer lending sector that floated last year, affirmed this trend in a recent update. Chief risk officer Jerome Le Luel noted that rising consumer insolvencies had impacted a small segment of its higher-risk loans in the U.K., which he attributed to business owners relying on personal credit cards rather than business bank overdrafts to bolster their company’s cash flow.
SMEs most vulnerable to Brexit impact on economy
Small businesses are amongst the most vulnerable to the impacts of slowing growth, as essential capital investment dries up and SME companies are left without sufficient cushions to absorb losses. As growth forecasts remain pessimistic for the year ahead, over a third of small businesses say they expect Brexit to have a negative impact on lending. Brexit outcomes for businesses may be more positive than currently estimated however, with analysts projecting an upswing in growth if the UK reaches a trade deal before withdrawing from the EU in March.
4th Way, an independent ratings and analysis firm for the finance industry, recently compiled some Brexit research that predicted the worst-case scenario of a no deal-induced recession would cause bad debt write-offs to rise as much as fourfold, although it predicts that most lenders would “survive the blast”.
Companies advised to assess risks and prepare
To guard against the threats of an economic slowdown, Institute of Directors’ head of EU and trade policy Allie Renison advises SMEs to assess the vulnerability of businesses at all stages of their value chain to Brexit challenges. She elaborates: “This includes knowing your supplier’s suppliers and your customers’ wider commercial links, so you can anticipate any negative effects reverberating upstream or downstream.” SMEs with direct trade links with the EU are obviously poised to be most impacted by any setbacks to trading conditions, but those with suppliers who directly import or export from the EU will also be significantly affected and need to prepare.
How can CPA help?
Are you looking for financing?
Rather than looking to external sources, CPA can help you release capital tied up on your balance sheet.
We can get those late overdue invoices owed to you by your customers paid, freeing up cash for you to invest.
But we can help you access funds you didn’t even know you were owed!
If you have supplied your goods and services to businesses on credit and were regularly paid late then you could be due significant sums in late payment compensation.
We are talking to small companies and unearthing claims in the hundreds of thousands from former business customers who paid them late.
Those former customers used you as a free line of credit, regularly paying you late.
As a result you had extra costs, you had the distraction of having to chase payment, you had opportunity costs because your capital was tied up in their late invoices.
Under little used legislation, you are entitled to compensation for those late payments.
CPA have developed the technology and systems to unearth these claims, hidden in your accounting records and calculate the extra capital that you are owed.
We then have then can use extensive experience to recover those claims from your former business customers.
About CPA
The Credit Protection Association can help!
Formed in 1914, CPA has been providing credit management services to SMEs for over 100 years.
At the Credit Protection Association, we provide first class credit information that can help you avoid being over extended to customers who are at risk. Our monitoring service can flag up warning signs long before the end, giving you the chance to adjust and reduce your exposure. We provide recommended credit limits and credit scores on a traffic light system and can help you set appropriate credit policies for your customers.
We regularly publish lists of the latest insolvencies but by then it is too late. Our credit reports however predict approximately 96% of company insolvencies long before they arrive.
Companies in trouble usually have very bad bad cash flow and they try to deal with it by delaying payment to their suppliers, increasing your exposure to them.
If you supply to restaurants, help us help you identify the risks.
As a third party collector, we can also get your payments prioritised over those who are not as hot on collections. When you customer receives a letter from the Credit Protection Association regarding their outstanding account, they are going to want to get that resolved as a priority. Our overdue account recovery service can get your unpaid invoices to the top of their “to do” list and get your invoice paid.
Over the years we have collected billions in overdue invoices for our customers.
Our debt recovery and credit management services give our members the financial freedom needed to grow and prosper, while our new Late Payment Compensation department could unlock hidden potential and offer the compensation needed to springboard your business to success.
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The Credit Protection Association is a credit management company established in 1914. If you supply goods or services on credit then we can help you!
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