Facebook - Birmingham Business Twitter - Birmingham Business Instagram - Birmingham Business
http://www.mha-uk.co.uk http://www.edgbaston.com/events

Funding starvation


Birmingham-based SMEs have an urgent need for cash, but are being turned away from many ‘traditional’ lenders leading to the risk of a major funding gap as they strive for growth post pandemic.

New data from Allica Bank shows that 45% of Midlands-based SMEs will require additional funding within the next 12 months, but that more than half (58%) say they have previously been rejected when applying for extra cash. The deficit in funding will potentially hamper recovery and growth in the region, only to be compounded by the end of the UK’s furlough scheme.

In response to the findings, Allica believes new approaches to how banks assess businesses for finance and wider business funding schemes need to be urgently adopted to protect the 6 million UK SMEs post pandemic.

Explaining how current processes are not up to scratch, Reena Pithwa (pictured left), from Allica Bank’s Midlands relationship management team, says: “While some businesses rejected for funding may not have been viable, the high percentage suggests a wider issue where business performance and credit ratings are not being taken in the context of the pandemic. Instead, banks need to start taking a more forward-looking approach, using other data and information to assess the creditworthiness of a business.”

The survey results also demonstrated that more than one in five (21%) of businesses felt that they did not have access to adequate support from their banks during the pandemic and that only 30% feel completely confident in obtaining funding from their existing lender.

“While invaluable for some businesses, emergency covid loans have dominated the resources of many banks, who have then lacked the capacity to support financing business growth and the many businesses in our region that have been able to adapt and perform well during the pandemic,” she says.

“With 45% of SMEs knowing they will need financing over the next 12 months and a further 17% not being sure – relationship banking, and truly understanding our business’ needs, as well as providing business owners with access to tailored expertise and product knowledge – is going to come to the fore in the months and years ahead.

“However, most businesses I speak to in Birmingham tell me their bank no longer gives them access to this kind of personal support. Instead, they’re left to phone a call centre to speak to someone that doesn’t have any real SME lending expertise.

“Allica Bank, though – who I was excited to recently join as a Business Relationship Manager for the Midlands – is doing things differently. We promise to give every customer a dedicated local relationship manager, able to provide personalised and tailored support.”

Allica Bank was built specifically to serve established small and medium-sized businesses. It uses modern technology to enrich customer relationships – not replace them – by improving communication, increasing transparency, speeding up decision-making, digitising the application process, and cutting down on paperwork.

Of those SMEs looking for funding, the research shows that most Midlands businesses (37%) are looking to invest in new equipment, 18% to recruit new people, and a similar percentage to buy or upgrade premises. SMEs are also looking to invest in in marketing and sales (15%) and to support cashflow challenges (13%).

“The results paint a very positive picture for the region,” concludes Reena. “The vast majority of funding is being sought for growth and expansion, rather than recovery. A requirement that needs support if we are to see this region bounce back as it should.”

*Reena Pithwa is available on reena.pithwa@allica.bank or 07983 491 297

This advertisment feature appeared in the July/August edition of Birmingham Business.


Boosting business in the region

Midlands Engine Investment Fund (MEIF) improves access to finance

23rd June 2020

The power of asset finance

Investment in assets critical to growth

10th August 2021

Finance - now and in the future

Birmingham lender assesses changing landscape

20th January 2021

Accessing finance through ART

Opportunities for both borrowers and ethical investors

27th July 2021

Access to finance in a Covid world

By Steve Walker, ART Business Loans

17th June 2020

A key for unlocking cash

Invoice finance - a way to help businesses thrive

11th August 2021

Reasons for hope

Corporate financier Paul Heaven looks into his crystal ball

25th May 2020

GBSLEP strengthens board

New directors are appointed

29th September 2020

Flexible financing

Backing SMEs during the most challenging times

26th June 2020

The power of asset finance

Acquiring the assets you need when you need them

1st July 2020

Placements for law degree students

Solicitors award first places on new programme

24th November 2020

Back to the future

How asset finance can give fresh impetus to your business

25th June 2020

Businesses believe they will need a new approach

Research warns of shift from restructuring to insolvency

7th September 2020

Unity Trust Bank takes prestigious award

Finance brokers celebrate industry excellence with online event

1st December 2020

Help where it's needed

Support measures in place for impacted customers

30th June 2020