By drawing on best practice from the US and Germany, the report is critical of the UK banking system. In particular, the report slams UK banks for their “lack of transparency” and “limited local focus and control of lending decisions.”
The FSB sees the solution coming from the state, not from the banks, and is calling for UK versions of Government-backed schemes modeled on those prevalent overseas.
- An increase in the amount of peer-to-peer lending available with the Government urged to open up its own investor account to give the sector a boost.
- Bringing asset backed finance into the promised £1 billion Business Finance Partnership fund. According to the report, around one in three small firms with external borrowing currently use this form of finance.
- Community development finance institutions to be brought into the mainstream and for the Government to look at the success the US has had after this model was boosted by state funding.
- The creation of a debt bond market for small businesses that need greater funding (upwards of £250,000) for fast growth using small investment exchanges.
John Walker, the National Chairman for the FSB, threw down the gauntlet to the Government to consider their suggestions – “We challenge the Government to look for short term wins, such as helping existing peer-to-peer lenders scale up their operations, as well as thinking strategically about the longer term and the kind of financial infrastructure we need to underpin our economy and support small firms to grow.”
On top of the FSB report, there has been more action by SMEs attempting to lobby the government. In a letter to the Daily Telegraph published on 29th February 500 leaders of small and medium sized businesses argued for the removal of the 50p top rate of tax.
Entrepreneurs from across the country accused the chancellor, George Osborne, of putting “populist politics before sound economics”.
“As business people, we want to see our industries, our economy and the Third Sector thrive. Repealing the 50p tax would demonstrate the Chancellor’s wish to celebrate British entrepreneurialism, stimulate industry and contribute to the Government’s growth agenda.”
Small and medium sized businesses are sometimes referred to as ‘engines of recovery,’ because they account for over half of the UK’s total GDP and 60% of jobs.
In an effort to remain apolitical and side step the political quagmire that will arise, it may be wise just fleetingly mention that cutting taxes for the better off at a difficult time for the economy is never going to be a crowd pleaser.