George Osbourne’s recent announcement to even further expand the £80bn Funding for Lending Scheme (FLS), puts an emphases on the role the government plays in addressing the most common complaint from entrepreneurs – securing finance. The chief executive of EEF backed the move, saying that ‘expanding lending to SMEs is the right call’. And I tend to agree.
Starting your own business is an exciting time and although it takes a lot of hard work, watching your company succeed is definitely worth it. You’re able to drive your vision and practices into your business to see it grow and develop and be proud of the outcome once you’ve got it off the ground. However, any business leader knows that investment is needed at the outset and securing finance is no easy feat.
Here are a few of the government shemes that offer financial aid;
–FLS, which launched last August, gives banks the opportunity to borrow from the government at better rates, giving them an incentive to lend to businesses. Natwest for example has used the funding to make some business loans fee-free (http://www.natwest.com/business/products/borrowing/government-lending-support/funding-for-lending-scheme.ashx)
–The Enterprise Finance Guarantee started back in 2009 and underwrites 75% of loans to make them more attractive to banks. It’s provided £1.88 billion to over 18,000 small businesses so far (http://www.startups.co.uk/enterprise-finance-guarantee.html).
–The Start-up loan scheme is slightly different as it gives money straight to the entrepreneur. If you’re 18-30, all you need to do is submit a business plan with the hope it is good enough to receive the funding. So far they’ve invested £110 million.
None of these schemes work perfectly. However, anything that helps to improve entrepreneur’s access to finance is a positive step.
It’s worth thinking about other ways to keep costs down so that finance can be invested directly into developing new business opportunities. For example, working virtually can lower the overhead cost of renting an office, giving you the opportunity and flexibility to improve your business and work-life balance.
Reducing your overheads like this won’t remove the need for finance, but it will take care of a lot of worries, freeing up entrepreneurs to struggle with the banks and – hopefully – benefit from government schemes.
Posted by the Secret Businessman