February 25, 2007

Small Business Loan Takes A Dive

Loans to small businesses backed by the government's flagship Small Firms Loan Guarantee Scheme (SFLG) almost halved during the past year, following controversial reforms.

Department of Trade and Industry figures, obtained by the Financial Times, showed that the government underwrote SFLG bank loans worth just £225m to enterprise during 2006, compared with £422 in 2005-06 and £418m in 2004-05.

A new rule preventing companies that are more than five years old from qualifying from SFLG support was among a number of changes introduced in December 2005 to make the SFLG easier to use.

Mike Cherry, chairman of the financial affairs committee at the Federation of Small Businesses, said the five year rule was a backward step.

David
Small Business Resource

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July 11, 2006

Small Business Loans

I came across the article today about small business loans and it got me thinking about how small business loans are administered in the USA and the UK.

Frankly there's no comparison. I can see why there's such a big gulf between entrepreneurialism linked to innovation between the USA and the UK.

The article concentrates on SBA (Small Business Administration) loans to women-owned firms, particularly to metro Milwaukee women-owned businesses.

Apparently loans to metro Milwaukee women-owned businesses are down compared to the previous year and the SBA is concerned. So concerned about not meeting their targets the SBA are investigating the reasons.

Compare this to the UK where grants are available instead and where it's difficult for start up businesses to get startup grants. Also in the UK, the SBS (Small Business Service) wouldn’t investigate why any small business community, or any small business for that matter is not getting grant funding. It is simply not mandated to look after the interest of small businesses in this way.

I could go on about the gulf between small business financing and how inadequate the UK system is compared to the USA. Instead, you can read the article on small business loan yourself.

David
Championing Small Business.

Posted by David at 10:52 AM

November 22, 2005

Small Business Loans For Energy Efficient Irish Small Businesses

Small businesses in Northern Ireland can now claim interest - free loans of between £5,000 and £2,000 following £2.8 million increase in government funding to help tackle carbon dioxide emissions.

The 'grant' is being awarded to the Carbon Trust, which was set up by the government to help it meet the UK's (includes NI) climate change obligations.

Wilfred Mitchel of the Federation of Small Business NI, said, "recent energy price rises have impacted small businesses and the interest free loans will help these businesses benefit from energy efficient equipment and the resulting cost savings

D Davis
Small Business Resource

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July 12, 2005

Why Small Business Loans May Get Harder

Small and medium-sized business or enterprises (SMEs) could be forced to give personal guarantees in order to obtain business loans, after a recent landmark decision in the House of Lords.

The decision by the law lords in the case, brought by National Westminster bank (Nat West) to clarify a confusing ruling in 2001, will make it more difficult for banks to attach fixed charge to a company's receivables - the money owed to the firm by its customers - and will rob SMEs of a valuable form of security.

The judgment will also push banks with similar forms of debenture down the ranking of creditors to be repaid in an solvency. Banks are now expected to ask for additional security, such as personal guarantees or larger assets, before lending money.

John O'Connor, a litigation partner at Allen & Overy, the law firm that advised Nat West, said "Banks are going to have to reassess the terms on which they'll lend and look at taking further or enhanced security.

"It's an uncommercial decision that's difficult to square with the much-vaunted enterprise culture."

Stephen Alambritis, head of parliamentary affairs at the federation of Small Businesses, said: "We hope the banks won't have a knee-jerk reaction and that they'll look at the risk posed by the individual entrepreneur and small to medium size business rather that seeking a arm and a leg in security."

A fixed charge is secured on an asset that cannot be used by the debtor without the charge-holder's consent, while a floating charge sits over fluctuating assets that the debtor is free to use until the charge owner intervenes.

Fixed-charge holders are the top creditors when repayments are made by administrators but floating-charge holders rank below preferential creditors.

Since 1979 banks have assumed that if they arrange for a debtor company to have its receivables paid into one of the bank's accounts, this will give the bank a fixed charge over the receivables.

But the ruling in 2001 found that this practice gave banks only a floating charge over the assets. As many as 550 insolvencies had been stalled, awaiting the recent clarification.

David
Small Business Resource

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April 20, 2005

Small Business Loan Launched Today By United Nations

Small to medium size businesses are being encouraged by the United Nations Development Programme to protect biodiversity and lessen the impact of poverty in the world.

Loan investments of $30,000 to $500,000 are available to small to medium size companies over the next eighteen months as a pilot and will provide professional assistance in helping to build enterprises. The initiative is called Equator Ventures.

Funds from the United Nations Development programmes will be distributed by Equator Ventures who as administrators will distribute the funds to various organisations including: UN Agricultural and Industrializing agencies, The world Bank, Government of Japan, The Critical Ecosystem Partnership Fund and other organisations.

The small business loan or grant programme is designed to spearhead entrepreneurship that was recommended in a recent report commissioned by the agency called "Unleashing entrepreneurship: Making Business Work For The Poor"

Olav Kjoren, Director of The United Nations Development Program said, "The funds provide critical niche finance by filling a major gap in sustainable development finance that exceeds small grant funding (microfinance) and project finance.

David
Small Business Resource 20.04.05

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