Adam Rowse, customer and commercial director at Barclays Business, offers his perspective on the state of financing relationships between small business clients and banks.
The recent SME Finance Monitor, which is part of the Business Finance Taskforce, showed that just over half of small businesses (51 per cent) are using external finance, and 59 per cent of loan applicants got what they wanted straight away. However, if we are going to get the UK economy back on its feet banks need to ensure we are supporting all types of small businesses – both entrepreneurs and start-ups, as well as existing firms who could be struggling or alternatively looking to expand.
We need to continue to do more to support small businesses, and not just with their lending applications. We need to continue to prove to small businesses that they are at the heart of our business and crucially, we are ‘open for businesses’ with them, to help with all of their business needs. Banks need to not only be a place to access finance but somewhere where small business owners are able to access business knowledge; acumen and expertise, to help them create a successful long-term business model.
As part of my job, I spend a lot of time talking to business customers to better understand what they value most from their bank. Obviously credit features highly, but time and time again, customers talk about the support they receive from their relationship managers – whether that’s working with them to develop their business plan or just to ease some pressure around cash flow.
I genuinely believe that one of the ways to improve the trust between banks and small businesses is to move from a ‘them and us’ approach to one where small businesses feel able and confident to tap into the expertise and knowledge which we can provide.
So, my plea to small businesses today is to think about how you can better use your bank and take advantage of the support and wealth of expertise we offer. We can’t help unless you know you can come to us for help. Did you know for example, that many banks can provide legal advice or support on preparing a business plan or can help with operation issues? Some also offer seminars and workshops to help business owners with the challenges they face. Some banks specifically provide help to those businesses who have run into trouble, helping them address issues like better capital structures and finance, improved debtor management and more efficient use of premises, all of which can turn a troubled business facing collapse into a leaner, sharper company which will not only survive but can actually grow. However, without this ‘team’ mentality between yourself and your bank, you could remain unaware of the extra help you could access resulting in disastrous consequences for your business.
Our absolute priority is to rebuild trust with small businesses. So take action now, speak to your relationship manager today to find out how they can help you make your business a success – even if you don’t need financing. Ensuring we are lending is an important part of the solution but for me, it’s only one part.