Find alternative sources of finance for credit-starved small firms
sources of finance may be the answer to the credit crisis engulfing
small firms, according to a small business support group.
With traditional forms of lending to SMEs in short supply, the Forum
or Private Business (FPB) believes that a move away from bank
lending could help many firms to stay afloat. As a result, it
is urging the Government to look into creating more alternative
options for small businesses which have been denied finance by
traditional sources of lending.
The call comes in the wake of this week’s Public Accounts Committee
report, which found that the banks have broken their promises to
lend to small businesses, placing many in danger of insolvency.
The FPB is continuing to lobby for banks to increase the supply of
credit to small firms. However, the lobby group is arguing that
‘counter-cyclical’ alternatives need to be put in place which will
be less affected by recession and will increase choice and diversity
in the marketplace.
The options which the FPB believes policymakers should look into
include corporate bonds, leasing, invoice financing, supply chain
credit and, following the recommendations made by the Rowlands
Review, venture capital. The FPB is also arguing that the
Government should consider steps to reduce small firms’ dependency
on external finance altogether.
The FPB has set out its views on the issue in a discussion paper,
which will be submitted to the Treasury. Additionally, FPB
chief executive Phil Orford was attending a meeting on non-bank
lending with City minister Lord Myners at 11 Downing Street.
FPB policy representative Matt Goodman said:- “Our research
indicates that smaller businesses are too dependant on the banks for
finance. At the same time, the recent crisis in the banking
industry has made it clear that access to credit should be less
dependent on the economic cycle. Any way of reducing the ‘feast or
famine’ view of credit needs to be resolved before the next economic
Of course, we will continue to lobby for the banks to increase
lending to small firms and decide credit applications through a
fairer and less centralised process. But at the same time, we
believe the Government needs to put credible alternative sources of
finance in place which will reduce the monopoly on lending the
banking industry has.”
Recent FPB research found that the main obstacles for businesses in
accessing finance are bank-related. The availability of credit
from banks emerged as the number one problem for 19% of members,
followed by the cost of finance (11%) and the perception that banks
will only lend to businesses if the have assets (10%). As a
result, the FPB believes that the Government should prioritise
promoting choice in accessing finance to ensure that future
downturns in the UK economy are not made worse by issues over access
to affordable credit.
Will this help, if it arrives, come to
late? Email your views and thoughts to
Home Secretary gives green light to Mosquito device
the controversial device that produces an annoying high-pitched
noise to disperse youths has won the backing of the Home Secretary.
The Mosquito, devised by Merthyr Tydfil-based company Compound
Security Systems Ltd., emits a noise at a frequency only young
people and teenagers can hear. They can be used by beleaguered
shopkeepers, takeaway owners, banks and supermarkets etc. to scatter
gangs of youths gathering outside their shops.
Home Secretary Alan Johnson stressed his personal commitment to the
devices when addressing MPs during Home Office questions and added
that he felt the devices were “very helpful“ in aiding
communities plagued by groups of “rowdy young people”.
He was responding to a call from Labour MP Natasha Engel for the
devices to be banned because she claimed they were discriminatory.
Mr. Johnson told MPs:- “There is evidence that shows these
devices can be very helpful where people feel a congregation of
rowdy young people is actually adversely affecting their quality of
But it has attracted criticism from civil rights campaigners, who
complain that the devices discriminate against the young.
In December, First Great Western trains were forced to turn off the
device at a Devon station after complaints from young travellers.
They have since confirmed that they have reinstated the Mosquito, but
rather than leaving it running 24/7, the device will be used now at
specific times of the day. Even our editor Patrick Trollope
has complained about the device after having been affected by it,
and he is well over the age group it is meant to only affect, but he
is not the only adult to complain!
Compound Security Commercial Director Simon Morris responded to the
Home Secretary’s statement:- “We are pleased to see that the
government have at last given support to the Mosquito’s use by
police and local authorities. We have been campaigning for two years
to get officials to meet with use to draw up a national
implementation policy for the use of the device and we hope now that
the device has Home Office approval, that this will happen”.
Mr. Morris also stated that:- “forthcoming budget cuts for
police and local government will mean that there will be even less
money available to tackle anti-social behaviour and vandalism in the
coming years. Implementing Mosquito’s with a clear set of usage
guidelines for the police and local authorities has the potential to
save millions of pounds annually”.
Background - A written Declaration was submitted to the European Parliament in
June 2008 asking for a total ban on the Mosquito device. At the
close of the vote in September 2008 only 7% of MEP’s had voted to
ban the device.