Continuing ICAEW’s policy leadership on the issue of SME access to finance, this research presents follow-up research in order to advise and update the Coalition Government on issues affecting the current SME environment for borrowing and investment.
Policy Recommendations and outcomes
Our research suggests a variety of policy solutions for banks, businesses, government and accountants which help alleviate problems in the supply of credit to SMEs including:
- The banks need to improve their relationships with SMEs as they are currently breaking down
- The process of applying for finance needs greater clarity and transparency
- SMEs need to display good financial management
- Regular data on the supply and demand for SME finance should be regularly made available
About the research
In October 2010, we commissioned Ipsos MORI to conduct follow-up research in order to advise and update the Coalition Government on issues affecting the current SME environment for borrowing and investment.
This report is based on 21 in-depth interviews from a good spread of accountancy firms conducted between 12 October and 9 November 2010 among senior partners responsible for SME issues. In this report they are referred to as ‘SME partners’.
More information
For further information please contact:
Clive Lewis
Head of Enterprise
E clive.lewis@icaew.com
Svetlana Dimitrijevic
Senior Research Manager
E svetlana.dimitrijevic@icaew.com
Yvonne Burr
Head of Strategic Research
E yvonne.burr@icaew.com
Previous reports
Continuing the ICAEW’s policy leadership on the issue of SME access to finance, this research presents a new and up-to-date snapshot of the availability of credit for SMEs.
Policy recommendations and outcomes
Our research suggests a variety of policy solutions for banks, businesses and government which can help to alleviate problems in the supply of credit to SMEs, including:
- Banks must rebuild the trust which has broken down between businesses and lenders through a commitment to transparency and consistency
- Small businesses can improve their financial management and government can help to raise awareness about the importance of good financial management, particularly for start-ups
- The government must better manage expectations about the lending conditions surrounding public schemes designed to help SMEs
About the research
The ICAEW was recently asked by the Department for Business, Enterprise and Regulatory Reform, now the Department for Business, Innovation and Skills, to provide research into the lending climate for SMEs.
Produced with Ipsos MORI in May and June 2009, this forward-looking research polled senior partners from large and small accounting and audit firms. It brings together key insights from financial advisors with experience across SME corporate finance in every sector of the UK economy.
In early July, ICAEW Chief Executive Michael Izza presented the report’s findings to the Department for Business, Innovation and Skills and the Bank of England. Robert Hodgkinson presented the findings to No.10 Downing Street officials.
Context
Given the vital role SMEs play in driving economic recovery, access to finance will continue to be a critical issue for policy makers and business leaders in the coming months.
Lord Mandelson, the Secretary of State for Business, Innovation and Skills, recently confirmed that this issue ranks among the top issues of concern for the influential new department.
Our report finds that senior accounting partners expect an upturn in demand for credit in the SME sector over the next 6-12 months. Policy makers, therefore, have a narrowing window of opportunity to address supply-side problems in the credit market.
Only when credit is made more available to SMEs can this crucial sector of the economy play its part in helping to pull the UK out of the deepest recession since the Second World War.
Links
More information
Please contact:
Nick Maxwell, Public Policy Manager, on +44 (0)20 7920 8617
Clive Lewis, Head of SME Issues, on +44 (0)20 7920 8667