Government ‘lacks common understanding’ about SME funding


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The parliamentary Public Accounts Committee has raised concerns about the government’s broad understanding of funding for SMEs.



In its 38th report of the current session, the committee explains that many governmental initiatives to support SME funding are relatively isolated from one another.


This leaves departments managing their own schemes, with a lack of coherence and initiatives operated on an “ad hoc” basis.


Since the launch of the government’s Funding for Lending scheme, net lending by participating banks has dropped by £2.3 billion.


The value and total number of loans backed by the Enterprise Finance Guarantee also fell, in each year from 2010 to 2013, according to the report.


Margaret Hodge, chair of the Public Accounts Committee, said: “Despite government attempts to encourage lending to SMEs, many still struggle to access the finance they need.


“At the time of our hearing, overall lending to SMEs was down.”


This leaves SMEs looking to other, less preferable alternatives – the committee says overdrafts and credit cards are still the most often used funding options, despite ultimately costing more overall.


With this general lack of common thinking on SME funding, the government’s various departments and initiatives are therefore facing obstacles when it comes to getting the best return on any taxpayer money put towards small business investment.


The report expressed this key concern, saying departments are “unable to demonstrate that they are achieving best value for taxpayers’ money”.

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