Get used to a lack of finance, businesses warned
Midlands businesses have been warned they must get used to a new world order in which finance is generally hard to come by.
Speaking at Insider’s Directors’ Forum event in Birmingham, business leaders said the days of ‘easy money’ are unlikely to return.
Stewart Towe, managing director of Smethwick-based manufacturer Hadley Group and chairman of the Black Country LEP, said: "We have to accept that things have changed forever. I don’t think SMEs have necessarily got that message.
"A lot of lenders have left the marketplace and the Basel 3 regulations will require banks to maintain reserves at a much greater level than they currently do so the lending climate will become even tougher."
Lorraine Holmes, chief executive of Business Link West Midlands, agreed. She said: "If you’re a damn good business with a damn good track record you will have no problems raising money from the banks. If there is any element of risk you will have trouble. We were lulled into thinking that money grew on trees. There was an expectation amongst people that they had a right to get money. Every business that goes to a bank or comes to us has the best idea in the world and the best products. They don’t look at it from the lender’s perspective."
Larraine Boorman, managing director of Acua, the consultancy arm of Coventry University, believes businesses need to do more to help themselves. "A lot of businesses are saying they can’t raise the finance but what we are finding is that they haven’t robust enough business plans. They have got to justify their business case and their USPs in front of a finance committee. They’re finding that very difficult," she said.
And Tom Lawton, a partner and head of manufacturing at accountancy firm BDO in Birmingham, also suggests the difficult climate for lending will continue.
"The banks are in a terrible state themselves and are rebuilding their balance sheets," he said. "So whilst there is talk of funds being available they are having to balance that with rebuilding their bases. The barrier is quite high nowadays. Funding for future growth is very hard to get at."
