Business funding - the Government must do something!

Let me guess your reaction here - is it something along the lines of 'great - we can all start a crusade to get the Government to force banks to lend to small business'?  If so, I'm afraid you will have to fight that one on your own.

My point here is quite different - perhaps even the opposite; that our Government have totally missed the opportunity to reset the lending platform where it should actually be and have instead gone in for tokenistic gesturing by banging on about 'forcing banks to lend' and recruiting Lord Sugar as its 'Enterprise Tsar' (what the hell does that even mean?)

Don't get me wrong, I've nothing against Big Al, he has achieved a lot - recruiting him 30 years ago would have been a piece of visionary genius - however he is now a TV personality and property developer who has almost certainly not filled in a VAT return or had nightmares about the usurious Companies House late-filing penalties for many, many years. Ironically it is probable that his HR people have also taken all responsibility for hiring and firing. So from a 'hands-on' perspective, he now has more in common with his paymasters than with a new small business.

What is my perspective on this? I hear you ask:  Firstly, lets be clear that as a finance broker I earn money from matching borrowers to lenders. I will even confess that businesses which are struggling a bit can be an opportunity for me so in theory I should be banging the 'force banks to lend' drum. However, having served an apprenticeship of nearly a million years I am, for the first time actually feeling a degree of sympathy for lenders. Why? because - fueled by a false sense of confidence, prospective clients seem to have lost the willingness or ability to produce coherent information to underwrite a deal properly. When asking for information the reply will generally be along the lines of 'what do you need that for?'

There are 3 potential reasons for this:

1. The information is bad. I am half expecting this and will - as subtly as possible - explain that.
2. Someone else has offered a package without asking questions. Most unlikely - its not a big market and it is no secret that  lenders are cautious.
3. They have been fed an expectation that money should be forthcoming without them having to make an effort.

And this third point is where everyone - Government, banks, business advisors - all have a role to play. It is all about re-educating business (and indeed private individuals) on how to borrow. I'm not that old (am I?) but in my time I have seen the buying motivation for leasing change from 'who can understand my business & give best advice?' to 'who can do it quickest and ask fewest questions?'. Hardly a basis for sensible lending or borrowing is it?

I have previously promised that this blog will be about helping businesses to borrow - I'm afraid that will involve some harsh truths, not just platitudes.

Government ministers who happen to be reading - wake up! Drop the 'force banks to lend' crap and do something intelligent to help small business!