Manufacturers are calling for an immediate review of banking for small and medium enterprises after a new report showed SMEs are “disengaged” from finance providers.
The call came from the manufacturers’ organisation, the EEF, following the publication of the latest SME Finance Monitor, produced by the UK’s largest independent market research consultancy, BDRC Continental, for the British Bankers’ Association.
According to the SME Finance Monitor, only a third of SMEs are now using traditional bank finance – loans, overdrafts and credit cards – and a similar proportion are ranked as permanent non-borrowers – companies that seem firmly against borrowing now or in the future.
Meanwhile, only two out of five SMEs say they use external finance.
The Monitor found that finance was increasingly identified by SMEs as an obstacle to growth and that the UK needed more competitive and dynamic financial provisions for SMEs.
EEF regional director Andy Tüscher said: “The SME Finance Monitor shows rising disengagement with external finance providers and we need to turn this around with a more dynamic financial sector supporting the real economy.
“Access to finance matters because we need every pound of investment we can right now to support our SMEs growing into the globally-focused, mid-sized and ultimately large businesses of tomorrow.”
Mr Tüscher said the Government had to launch a review of the options for increasing private competition in SME banking and ought to launch its own ‘business bank’ to challenge existing bank lenders.
The EEF says the Government should use the £1 billion currently earmarked for a British Investment Bank to fund a “Challenger Bank.”