The key message from Chancellor George Osborne’s autumn statement last week was that – for smaller businesses – the money has to continue to flow.
His announcement of billions of pounds in funds to provide loan guarantees for small businesses was welcome, because banks are increasingly wary of any exposure to risk and so small firms are missing out on finance.
I’ll make an admission here: for most of the past 25 years or so I’ve been a banker. I still am, running the only trade association-owned bank in the country.
The British Independent Retailers Association (Bira) lends solely to independent businesses, so I know a lot about their wants, their needs and their ability to repay.
But it’s not loan finance feeding independents’ daily trading, it’s the run- of-the-mill overdraft.
More than 60% of our members have had their overdrafts cut over the past year as the big banks rein in their exposure. Some have had them removed completely. Many others, even running limited companies, have been persuaded to take on personal loans to provide the cash.
The experience of our fashion members – that suppliers are finding credit insurers withdrawing cover for small businesses – is not being seen in other areas of trade that Bira covers.
More than 90% of shops fit the micro-business mould of 10 employees or fewer, and small fashion retailers in this range have opened nearly twice as many shops this year as have closed. The Government desperately needs such growth to work, but to do so it needs to make sure credit is made available where the money will actually produce that growth – at the economy’s grass roots.
- Michael Weedon is deputy chief executive of the British Independent Retailers Association (Bira)