Do banks support SME’s – HSBC does

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Don, Andrew and Richard by Geoff Hudson-Searle

I was recently invited to a day with HSBC at the prodigious ‘The Grove’ property in Herfordshire to play golf and understand more about the HSBC support to SME businesses in the UK.

Interesting enough, the number of private sector businesses in the UK increased to 4.9 million at the start of 2013 – a record high. BankSearch report that there were 447,000 new business start-ups in Great Britain during 2013. This is 9% lower than 2012, but is still healthy and higher than in 2008 and 2009.

We discussed that small and medium-sized businesses account for 99.9% of private sector companies and provide 60% of private sector jobs. These enterprises have an important role to play in driving growth, opening new markets and creating jobs

The facts are when it comes to small businesses, data is more scanty, but a survey from law firm Taylor Wessing has revealed that 84 per cent are either “confident” or “somewhat confident” about growth in 2014.

Geoff Hudson-Searle
Geoff Hudson-Searle

Top priorities include increasing profits (29 per cent) and growing their customer base (25 per cent). 11 per cent said they were prioritising cutting costs, while nine are focusing on expanding internationally.

The survey also logged the challenges small businesses see for this year (list below).

The number one concern will probably be ameliorated over coming months. Earlier this week, EY published a report which found that lending is set to rise in all areas of the economy, with UK bankers’ confidence higher than anywhere else in Europe.

Data from the Bank of England has shown that, although there was a sizeable drop in loans to big businesses towards the end of 2013, small business lending rose.

And in terms of interest rates, the fall in inflation to two per cent has, according to economists, slightly reduced pressure (for the time being) on the Bank to raise rates.

Top 10 challenges for 2014:

1.     Access to lending from banks (13 per cent)

2.     Increases in tax and interest rates (13 per cent)

3.     Increasing costs e.g. energy and travel (11 per cent)

4.     Retaining and boosting competitive USPs (11 per cent)

5.     Skills shortages (9 per cent)

6.     Transitioning from start up to SME (9 per cent)

7.     Accessing international markets (7 per cent)

8.     Overregulation (7 per cent)

9.     Economic volatility (6 per cent)

10.  Compliance and regulatory issues (5 per cent)

In a bid to contribute to Britain’s economic growth, HSBC has announced the launch of a £1.5bn funding pot for SMEs.

Last week, HSBC dedicated a £500 million funding pot to West Midlands SMEs in a move to allocate £6 billion of new lending facilities across its network.

Amanda Murphy, Head of Business Banking for HSBC, said: “Ambitious British businesses are saying they are going to invest this year and get on with growing.

“We want to support their ambitions by significantly increasing our net lending to businesses this year. We are helping more than 6,100 businesses start up every month, and want to support our hard working SME business owners on their drive for growth.”

HSBC also published a new report last week called ‘Business of Growth’ in conjunction with the funding pot, which claims 2014 will be a turning point for ambitious businesses in the West Midlands.

The bank identified Britain’s business growth potential for 2014 by incorporating analysis of 39 separate forecasts of GDP and investment.

The report also highlights the constant upwards revision of GDP growth over the last 12 months. The UK economy’s outperformance of the Eurozone and a rise of business confidence are seen as apt surroundings for growth.

The analysis itself is supported by the bank’s own experience, where new term lending us up 16 per cent year-on-year, and the overall value of lending that is being approved is even higher, at 37 per cent over the same period.

To support SMEs right across the UK, the bank will also:

•             Host 100 ‘Access to Finance’ workshops, to help small companies maximise their chances of securing funding

•             Hold over 50 ‘Fast Lane to Growth’ events across the UK, sharing strategies to accelerate growth and enter new markets;

•             Hold five ‘Global Connections’ thought leadership events where the UK’s best business leaders will share their secrets to success.​

As always, feel free to contact me if you have any questions!

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