Earlier this year the UK Government owned, British Business Bank Investments (BBBI) published their 2016-17 report on Small Business Finance Markets. The report expands on the results of their 2016 Business Finance Survey, conducted November 2016, that explored SME awareness of alternative finance and their previous experiences when looking to source business finance.
The BBBI, cited an increase of 1.8% in the amount of small UK businesses since 2015 – the figure now at 5.5 million businesses in the UK. They also found that small businesses account for 60% of private sector employment, and are a critical source of growth, productivity and job creation for the UK economy.
Although fast growing businesses were found in all regions across the UK, economic growth of these SMEs is distinctly divided by geography. Since 2007 the economy in London has grown by 16% compared to growth of only 1% in Northern Ireland, 8% in Yorkshire and the Humber and 11% in Wales. This imbalance is to be addressed by support from Northern Powerhouse Investment Fund and Midlands Engine Investment Fund, to provide a total of £650m to regions outside the South East later this year.
Knowledge of specific providers remains low, with the bank appearing to remain as SMEs’ first port of call when considering additional finance; despite approximately 55% of small business owners declaring they had been unsuccessful when applying for new loans.
One in three small businesses did report that their first step would be to research their options – classed as ‘information gathering’ – which could help drive competition in the alternative finance market and improve the way that these lenders operate for smaller businesses.
Keith Morgan, CEO at the British Business Bank said: “we believe that well informed small businesses are required for a dynamic and competitive markets. We are committed to ensuring that small businesses know about the finance options available to them”.
NCF PLC has a unique approach to lending and we are able to help many businesses where other lenders often let them down. Every application is reviewed by an underwriter and never judged on a tick box basis.
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Make that that life-changing decision that sees you being the boss by owning your own business. It may not be for everyone, but if you do find yourself thinking about this, make sure you follow our advice:
Find the right business to buy. You must decide on the Industry Sector before you decide on the actual business you want to buy. Be sure that you have enough knowledge and experience in the chosen industry. You need to consider the size, profitability, location and number of staff, complete with realistic figures, proposed working arrangements, opening hours and financial forecasts of the venture.
The value of the business. There are several things you should consider when assessing a business for sale, of course, knowledge of the sector and industry are essential. What services does the business offer? Does it come with tangible assets, such as equipment and furniture? What about intangible assets, such as its brand and customer lists? Is it profitable? Are employees paid in line with the local competition? Are the premises owned or rented? Is the business managing its debt efficiently? Are all finances up to date? Does the business sale include stock? Is the valuation in line with other businesses for sale on the market, do not just rely on the word of the seller. Why is the current owner selling?
Find a solicitor you can trust. Make sure the funds you use to purchase the business pass from your Solicitor to the sellers Solicitor. NEVER just pay the seller directly!
Account for all costs. From Solicitor fees to start up cash flow. Buying a business comes with a lot of expenses. So make sure the business is truly worth it before you start ploughing money into it. Make sure, also, that you take every potential outlay into consideration, for example staff wages and stock will need to be paid for immediately along with rent and business rates and marketing.
Please speak to one of our team for either more advise or to be considered for funding for the purchase of a business.