Is Now a Good Time to be an SME

With economic signs in the UK having remained unclear for a number of years, business owners are keener than ever to hear good news, and it just might be finally arriving. There’s been talk of an economic recovery circulating for the past twelve months but most areas of industry have been reluctant to show the corresponding figures. Here, we take a look at what the climate looks like for SMEs operating in Britain today.

Lending is on the up

A recent piece in the BBC highlights the scale of the increase in lending which SMEs experienced earlier this year. The Bank of England has reported an increase of £238 million in lending to small and medium sized enterprises just in May and June. In June, the total figure for lending shot up to £170.4 billion. Just one year ago in the same period businesses saw a fall in lending of 3.3%. This is a clear indicator that things are looking good for SMEs.

Incentives in place

The concrete change in lending is no accident. The government has outlined clear plans to encourage lending to smaller businesses in the hope to revive the UK economy. In April of this year, the Funding for Lending Scheme (FLS) was extended, giving banks the chance to borrow from the Bank of England with attractive rates on the condition that the money was used to fund small businesses.

Attracting investment

There’s no doubt that now is a great time for SMEs to be seeking investment, but that’s not to say that investors are handing out cash. As investment is being encouraged, it is more important than ever that businesses do all they can to prove to potential investors that their business is worth the spend. Making use of tools such as small business accounting software can make all the difference when it comes to acquiring key funds, not to mention when it comes to handling the investment.

The benefits to SMEs

The figures for SMEs in need of cash are certainly looking good. What’s important to recognise here is that these positive numbers are not yet being shown across the board. Larger companies in the UK are actually borrowing less as time goes on. This suggests that it is the Bank of England’s incentives which are making the difference, focusing on investment in smaller companies.