Banks wrong to reduce SME lending amid economic uncertainty
Tech entrepreneur Paul Haydock has voiced concern that banks are pulling back from lending to small businesses.
Virgin Money has shelved plans to move into business banking due to economic uncertainty following Brexit, sending shockwaves through the banking and SME sector.
The Royal Bank of Scotland and NatWest sent letters to their 1.3 million business customers warning that if the Bank of England reduced the already low base interest rate, businesses would be charged to deposit money.
The interest rate was subsequently dropped from 0.5 per cent to 0.25 per cent on Thursday.
The uncertainty has left many SME owners concerned about what the future holds for their finances and cash flow.
“Confidence and consistency are absolutely vital within the SME community right now,” said Haydock, CEO of FinTech SME DueCourse.
“We will see a shakeout of businesses who are not wholly committed to UK SMEs.
“There may be economic uncertainty, but in our view, well-found, stable SMEs shouldn’t be disadvantaged purely by wider sentiment.”
The 5.4 million SMEs registered in the UK accounted for 99.9 per cent of all private sector businesses at the start of 2015, and 47% of all private sector turnover.
It is clear that they are crucial to the UK economy.
DueCourse founders Tim Borden, Paul Haydock and Jonathon Grove
Haydock says DueCourse can help firms which are chasing invoices and suffering cashflow struggles.
He founded the start-up with Jonathon Grove, head of product, and Tim Borden, who operates as CTO, in Manchester in 2014 after his previous SME was left constantly dealing with late payments.
It allows businesses to secure access to the funds in their unpaid invoices whenever they need to, with just a few clicks.
“At DueCourse, maybe in contrast to others, we are actually accelerating the accessibility of funds through unpaid invoice advances that are available to our SME customers,” he said.
“By offering the half a million SMEs using cloud accountancy packages the opportunity to unlock cash tied up in unpaid invoices, DueCourse has the ability to be a positive change maker in these uncertain times.”
DueCourse is on course for growth and on target to complete more than £16m in invoices advances in 2016 - and they’re planning on launching in Europe over the next three years.