WIREDGOV

Results from a new survey by the Scottish Government show that Scots firms are continuing to face challenges in accessing cash flow to grow their businesses.

The updated Access to Finance Survey for Small and Medium Sized Enterprises (SMEs) shows that, while fewer companies are being rejected outright for finance deals, there continue to be issues with the cost of finance. The survey also shows that fewer firms are likely to secure 100 per cent of the funding sought.

Finance Secretary John Swinney said:

"When we first published this survey last June it demonstrated the problems being faced by businesses applying for finance deals from their banks.

"While conditions appear to have eased to some degree and banks are more willing to lend to viable business propositions, the survey suggests that lower amounts of finance are being obtained and that costs are an issue for the majority of SMEs.

"These results are from November last year and we will continue to analyse and monitor the trends in order to ensure that all viable businesses, from the smallest to largest, have appropriate access to finance in order to meet their needs and ensure a sustainable recovery for the Scottish economy as a whole.

"That is reflected in the raft of measures we have put in place to support Scotland's small businesses. For example, the Small Business Bonus Scheme is ensuring that tens of thousands of businesses across Scotland either have their rates discounted or pay nothing at all. And just last week we allocated a further 10 million pounds for the Scottish Investment Bank, to support access to finance for those firms with most to contribute to Scotland's economic growth.

"But it is also incumbent upon banks, particularly given the vast scale of public investment they have received, to ensure that the signs of improvement are continued and deliver real benefits to viable, small businesses looking for fair and equitable access to finance."

Key points include:

• For the majority of SMEs, the ease of obtaining finance remains unchanged since March 2009. Banks appear more willing to lend to viable business propositions, but the survey suggests that lower amounts of finance are being obtained

Supply

• For the majority of SMEs in Scotland the ease of obtaining most types of credit was unchanged relative to March 2009
• On supply, the emerging evidence on new lending indicates lower outright rejection rates compared to March 2009, showing a marked improvement in initial approval rates
• Overall, however, fewer firms are likely to secure 100 per cent of the funding sought

Costs of Finance

• For all SMEs, nearly 40 per cent of firms felt the cost of finance was higher than one year previous
• The main experience for SMEs refinancing over the period from March 2009 was an increase in costs. Either increased margins over the base rate or increased fees and charges for arrangement were noted

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