BOOSTING FUNDING FOR LENDING WILL “COMPOUND FAILURE”, WARNS ALTERNATIVE FINANCE PROVIDER PLATFORM BLACK……..
The alternative finance provider for business, Platform Black, has urged the Chancellor to ignore calls to expand the Funding for Lending Scheme in this week’s Budget.
George Osborne is under pressure to make it easier for businesses to access credit as a way of kick-starting the stagnant economy.
But Christopher Shaw, CEO of the alternative finance provider Platform Black, warns that ramping up the Funding for Lending Scheme is not the answer.
He commented: “As this month’s dismal lending figures show, the Funding for Lending Scheme has let Britain’s businesses down.
“It may have persuaded the banks to offer more mortgages, but most of the mainstream banks remain unwilling or unable to lend to business.
“Our research shows that 81% of businesses struggled to keep on top of cashflow in the past year, with 84% rating the banks’ reluctance to offer credit as a barrier to success.
“While everyone recognises the need to give a helping hand to the UK’s embattled business sector, those calling on the Chancellor to boost the Funding for Lending Scheme are spectacularly missing the point.
“Throwing more money at Funding for Lending will only compound its failure to help business.
“The Chancellor says he is committed to improving the lending landscape for SMEs. If he is to do so, he needs to look beyond the conventional banks.
“Despite the funds made available to them by the Funding for Lending Scheme, the banks’ continued reluctance – or inability – to lend to business has spawned a vibrant market in alternative finance.
“It should be nurtured and encouraged in the Budget, as its power to help SMEs is far greater than any headline-grabbing tax handouts will ever be.”
Platform Black is therefore calling on the Chancellor to use the Budget to do more to encourage the alternative finance landscape. It suggests that he should:
§ Encourage the Business Advisory Service to play its part, by talking to businesses about what alternative finance options are available.
§ Extend the successful Enterprise Investment Scheme to include debt finance as well as equity finance.
§ Allow lenders to offset any losses against interest or discounts earned just as banks are able to do.
§ Introduce tax breaks for those who lend to, or facilitate lending to, SMEs – this will give an instant boost to the alternative finance sector.
§ Relax the rules on ISAs to allow investors to lend directly to business via the tax-free ISA wrapper.