OECD: Credit crunch squeezing entrepreneurs and small businesses more than big firms
Thursday, 19 April 2012 10:39
The credit crunch has been tougher for small and medium-sized businesses than for large companies, according to newly compiled OECD data.
Financing SMEs and Entrepreneurs: An
OECD Scoreboard finds that small and medium-sized enterprises (SMEs) requesting loans between 2007 and 2010 faced higher interest rates than for large companies. Loan conditions for SMEs included shortened maturities and increased demands for collateral.
Although interest on loans to SMEs trended downwards throughout the financial crisis, the interest rate spread between SMEs and large firms increased, including during the tentative recovery of 2010. The easier credit terms for large companies suggests that smaller firms were considered to be a higher risk with poorer business prospects, the report says.
SMEs are crucial engines of economic growth, jobs and social cohesion, according to the OECD. In many countries they represent around 99% of all firms. Access to finance remains one of the biggest challenges in the creation, survival and growth of small firms.
Analysing data from 18 countries, the report finds that business loans to SMEs fell sharply during the recession and although they picked up somewhat in 2010, they generally failed to reach their 2007 levels. Venture and growth capital also suffered a big drop during the period studied.
The fall in demand for goods and services during the crisis, combined with tighter credit conditions, hit the cash flow and liquidity of SMEs hard, resulting in increased payment delays. Many firms were forced into bankruptcy, contributing to the continuing high levels of unemployment levels in many regions.
The OECD report fills a longstanding gap in data needed to monitor SME finance using comparable indicators. To be released annually, it aims to increase understanding of SME financing needs, help in the design and evaluation of policies and monitor the implications of financial sector reforms on access to funding for small businesses. The report provides detailed country profiles of financial conditions for SMEs.
Financial inclusion was identified as a G20 priority at the Seoul Summit in December 2010. In 2011 leaders of the G8 countries meeting at the Deauville Summit tasked the OECD, along with a number of international institutions, to identify impediments to SME growth.
The countries covered in the report include: Canada, Chile, Denmark, Finland, France, Hungary, Italy, Korea, The Netherlands, New Zealand, Portugal, the Slovak Republic, Slovenia, Sweden, Switzerland, Thailand, the UK, and the US.
Marches Redundant Building Grant Scheme
The Marches Redundant Building Grant (RBG) is now open for applications. It aims to provide grant support to existing and start-up businesses through out Herefordshire, Shropshire and Telford and Wrekin to enable the conversion or refurbishment of redundant buildings to bring them back into productive business use, or to enhance their current business use. This will address an identified lack of available and suitable workspaces in the local enterprise partnership area, creating and safeguarding jobs
Grants of up to £50,000, or 30% of eligible project costs, are awarded. The minimum grant is £3,000 (with project costs of £10,000).
Eligible projects can include conversions or refurbishment, including upgrading of mains services, to provide facilities for:
• Manufacturing
• Crafts or service businesses
• Office premises( not speculative developments)
• Retail outlets
For a building to qualify for a grant it must either be completely unused or unusable in its current state for the purposes for which it is now needed. Grants cannot be used for pure refurbishment where the use of the building will not be changed, although assistance can be given for upgrading mains services in order to help a business in its expansion programme.
Eligible applicants can include individuals, partnerships, charities, limited companies or co-operatives. Applicants can be owner-occupiers or tenants. Tenants must have a fixed term lease with at least three years unexpired and written consent for the proposed works from their landlord
This grant is not available for conversion to or refurbishment of residential property, or for buildings which will be used for agricultural or horticultural purposes. If you are a farmer applying for a grant, please discuss your proposal with the Redundant Building Grant Team at the earliest opportunity due to European restrictions with this funding for those involved in primary production and processing. Applications must be made and approved before work starts. No advance payments can be made. Grant awards are discretionary and will be at the minimum required to enable the project to proceed.
How do I apply?
Please contact the Programme Manager to discuss your proposal where you will be asked to complete a Stage One Enquiry Form. If the details of your project meet the initial criteria and priorities of the scheme, you will then be invited to complete a full application.
Contact Details:
Caroline Cattle
Redundant Building Grant Programme Manager
Herefordshire Council
PO Box 4
Plough Lane
Hereford
HR4 0XH
Tel: 01432 260662
Fax: 01432 383031
E-mail: rbgscheme@herefordshire.gov.uk
The Chancellor has today (20th March) launched the National Loan Guarantee Scheme (NLGS), helping smaller businesses across the UK access cheaper finance.
Participating banks will pass on the entire benefit that they receive from the guarantees to smaller businesses across the UK through cheaper loans. Businesses that take out an NLGS loan will receive a discount of one percentage point compared to the interest rate that they would otherwise have received from that bank outside the scheme. Further information on the NLGS, including a list of participating banks is available on the HM Treasury website www.hm-treasury.gov.uk/nlgs.
John Walker, National Chairman, Federation of Small Businesses, said: "We are pleased that credit easing is now available for small firms to use. Recent FSB research indicated that around 60 per cent of small firms believed that credit is unaffordable and so this scheme should help reduce that burden. What we now need to see is clear communication to small firms and bank branch staff so that everyone is aware of it and how it will work so that businesses can benefit from it."
Attached are:
Essentially, businesses will be able to go to the bank and request a loan using the scheme. There is no minimum amount that they have to borrow. The procedure will be exactly the same as for a regular loan – the Government is not guaranteeing any part of the loan and so the normal application process will take place. If the business is successful it will get the loan at one percentage point lower than it would have been given. More info is in the attached Q&A.
New directory of finance providers
Herefordshire Enterprise Fund
Visit http://www.herefordshire.gov.uk/business/business_support/45918.asp for information about this new scheme, funded by the European Rural Development Fund. Strict criteria is applied, but applications are currently being sought from those sectors which the scheme covers including though not limited to: tourism related businesses, some manufacturing and IT.
Leadership and Management Advisory Service (LMAS)
The LMAS provides government support to develop the leadership and management skills of senior leaders.
To be eligible, your business must be in England and have:
a) Two to 249 full-time equivalent employees
b) The potential for high or fast growth
If eligible, you will receive:
- A free assessment from a skills adviser to identify the leadership and management development required by the nominated leader. The adviser will then agree with the leader on a development plan.
- A government grant of up to £1,000 for use on management and leadership training. You will have to match the amount of this grant - eg to receive a grant of £500 your business will have to contribute £500
Contacts for West Midlands: 0845 894 8969 or email lmas@embltd.co.uk
Business Booster and Start up Grants in Malvern
Malvern Hills District Council has recently announced that it is able to continue providing £500 start up grants to qualifiying local people embarking upon their own enterprise and up to £2000 to established businesses who want to take on staff, expand their premises or reach new markets etc. For more information visit MHDC or download the grant pdf here.
North Worcestershire Start up and Business Growth Grants
Wyre Forest, Redditch and Bromsgrove Councils, in partnership with Business Link, North East Worcestershire College and Worcestershire County Council, offer a £750 grant and an opportunity to acquire the knowledge and skills necessary to make your new business a success.
GENERAL
The £750 grant is awarded to new businesses trading in the North Worcestershire area. The scheme is operated in partnership with Business Link and North East Worcestershire College.
The grant is to be used for products and/or services to assist the new business – proof of purchase may be requested Franchises are not eligible to apply for the grant.
Payment of the grant will be made directly into applicants' business bank account upon
approval of Application.
CRITERIA
The business must:
- Be trading in North Worcestershire (more than 1 month - no longer than 6 months).
- Remain in North Worcestershire for at least 78 weeks from receipt of Grant.
- Create employment for more than 30 hours per week for the applicant.
Applicants must have:
- No outstanding Council Tax and/or National Non Domestic Rate payments.
- Successfully completed the Business Link Start Up Programme.
- Contacted the Valuation Office Agency when running a business from home.
- Obtained relevant licences and permissions (including planning permission) to trade.
Applicants must supply the following:
- An approved Business Plan with Cash Flow and Profit & Loss forecasts.
- Evidence of personal investment (minimum £500), i.e. signed & stamped Bank
Declaration Form.
- Evidence of trading, i.e. a copy invoice and copy of relevant bank statement.
- Details of formation of business, i.e. copy of Partnership or Limited Company details
(where applicable).
TO APPLY –
CONTACT NORTH EAST WORCESTERSHIRE COLLEGE FOR A PLACE ON THE
NEXT AVAILABLE WORKSHOP:
Tel: 01527 548863 - Email: bsup@ne-worcs.ac.uk
GENERAL ENQUIRIES: Economic Development & Regeneration – North Worcestershire
Tel: 01562 732928 - Email: regeneration@wyreforestdc.gov.uk
BUSINESS INFORMATION: Business Link – West Midlands
Tel: 0845 113 1234 - Email: info@businesslinkwm.co.uk
Web: www.businesslinkwm.co.uk
Bromsgrove District, Redditch Borough, Wyre Forest District and Worcestershire County Councils jointly fund a £2,000 Business Booster Grant which aims to help young but growing businesses, trading between 18 months and 5 years, make a step change in their development.
Location of Applicant Business:
The business must be located within the local authority areas of Bromsgrove District, Redditch
Borough or Wyre Forest District Councils.
The Application:
The Application must explain the business' expansion plans and explain how the grant will help to
make a difference. The information should include how the grant will be used to, for example:-
- Help the business access new markets
- Create new jobs
- Bringing forward an important business plan objective
- Improve the skills of owners or employees
- Purchase essential equipment which will improve the business' viability
- Help overcome a specific problem which is obstructing progress
The Grant
1. Grants will be limited to one per business on a first-come, first-served basis.
2. Successful grant applicants will be offered 50% of the costs of an eligible project, up to a maximum of £2,000. At least 50% of costs must be funded from the business' own resources.
3. Three quotes for the goods or services are required.
4. The grant is not retrospective and cannot be used for the reimbursement of goods and/or already purchased before the date of the offer letter.
For further information contact Steve Singleton Economic Development Manager – North Worcestershire Tel: (01562) 732168 Email: steve.singleton@wyreforestdc.gov.uk
Occupation of Empty Retail Units
The Grant aims to encourage the occupation of empty shop premises and is offered on a ‘first come first served' basis. The Grant is available for the following areas:
Kidderminster - Worcester Street, Marlborough Street,
Coventry Street, Blackwell Street (within ring road)
Stourport-on-Severn - Town Centre
Bewdley - Town Centre
A Grant of up to £4,000 can be used for permanent improvements to vacant retail
premises, e.g.
- Shop Fronts
- Repairs to structure and/or services
The grant will be paid after all works have been completed and approved.
APPLICATION CRITERIA
1. The retail premises must be located in one of the above named areas.
2. The retail premises must have been unoccupied for a minimum of one
month prior to the date of the application.
3. Where applicable, the length of lease is to be for more than 12 months.
4. All works to be carried out by a registered contractor.
5. Payment will be made upon presentation of the original, signed
Completion Certificate.
The following is to be supplied with application:
ESSENTIAL
- Three copies of written quotations for the work.
- A copy of written consent for the works to proceed from the Owner of the
premises.
- A copy of relevant plans, designs and specification for proposed works.
- Confirmation of any necessary Planning and Building Regulation approval,
as required.
Assessing the Application
A check will be made to ascertain whether the applicant has any outstanding debts owed to Bromsgrove District Council, Redditch Borough Council, Wyre Forest District Council and/or Worcestershire County Council. The application will not be assessed until any such debts are cleared.
Payment of grant
Payment of the grant will be made when North Worcestershire – Economic Development & Regeneration receives copies of paid invoices for the approved grant from the applicant. Invoices dated before the date of the offer letter will not be eligible for payment.
For more information contact Steve Singleton, Economic Development Manager, North Worcestershire Tel: (01562) 732168 or steve.singleton@wyreforestdc.gov.uk
Are you looking for business finance in Worcestershire?
The Finance Worcester website lists local, national and European funding resources.
http://www.worcestershire.gov.uk/cms/business/finance-worcestershire.aspx
Be the Boss (BtB)
This scheme is now open to all UK Armed Forces service leavers, regardless of their discharge date (previously, only leavers discharged since October 2001 were eligible).
BtB is a service offered through the Royal British Legion aimed at supporting service leavers to plan, fund and grow their own small businesses. Funded by BIS, the Legion and its partners offer training in small business set-up, assistance in writing a business plan and financial forecast, funding to assist in the launch or growth of a business, periodic health checks and business mentoring to applicants from across the UK. The programme consists of the following two types of funding:
Business Grant - a grant of up to £7,500 can be provided for eligible applicants to assist with the costs of starting up in business. Business Loan - a loan of up to £30,000 can be provided to support businesses.
Interested parties are required to register on the Legion sponsored website and submit a business plan, before completing the online application form.
New funding scheme will offer funding to small companies to enable them to research and develop new products, processes and services that could stimulate economic growth.
Managed by the Technology Strategy Board, the Grant for Research and Development scheme, which came into effect from 4 April 2011, will support small and medium-sized companies (SMEs) across the UK that want to carry out research and development generating new and innovative products and services. The new scheme supersedes the Grant for R&D scheme previously managed by England's regional development agencies and will have similar objectives. visit the science business website for more information.