The crash of the banks and resulting credit crunch had a devastating impact upon SMEs.
Businesses that depended upon consumer spending more than others saw sales drop dramatically, but costs go up. Customers can no longer get loans or credit cards as easily as they once could, and so public spending trends are still not back to how they were.
Small-to-medium businesses have been struggling to keep their business going, but it seems like there might be some positive news finally.
RBS has announced that they are willing to lend to SMEs using a government funded lending scheme.
The government will underwrite the scheme, and although it will still be difficult to apply for, there are on offer loans of between £250,000 and £25million. These loans will be aimed at medium businesses with average annual sales at around £25 to £500 million.
Another benefit to this scheme is that the businesses who take out these loans underwritten by the government can for two years defer capital repayments.
Although these loans seem like a great opportunity for SMEs, there are of course risks, as with any loan. The issues that may push a company to take out a loan, such as high costs, but a lack of profits, could still be around when the capital of the loan needs to be repaid.
Vince Cable has encouraged small and medium businesses to not just look at the high street for help and advice, but to also look beyond that. He stated: “The old fashioned banking model is broken.”
So where does this leave these SMEs? What is there beyond the high street?
The internet is one of the biggest resources we have. We use it daily to bank, communicate and keep up to date with the news. This kind of resource is exactly the kind of place Dr Cable suggested that businesses look towards.
Not only is there a wealth of knowledge and help, but there are sites specifically aimed at small businesses. Companies need to be able to adapt to change so that they can stay ahead in this ever-changing world. Get online, create a website, look into getting discounted business electricity from Make It Cheaper.
Websites such as makeitcheaper.com offer free financial advice to small to medium businesses and can save companies thousands. They look at many different areas of your company and see where you could be saving money.
Try one of these suggestions before going to the bank, and hopefully you won’t need to take out one of these appealing, but risky loans.