The chief executive of the Start Up Loans company has predicted that demand for government-backed funding will rise if the UK falls into post-Brexit economic decline.
Tim Sawyer, one of our Small Business Decision Makers 2016, told the Financial Times: “Against the backdrop of doubts relating to employment and access to finance, we might expect more people to turn to the scheme.”
Sawyer also pledged that Start Up Loans would rise to the challenge of this, telling the paper that his organisation plans to lend almost £70m to those looking to start a business this year.
Since the referendum result was announced, high street lenders have rushed to reassure small business customers over the resilience of the post-Brexit SME lending landscape.
“Following the referendum many business owners will be reassessing their plans for growth and may need to re-plan or increase the resilience of their finances,” said Ian Rand, chief executive of business banking at Barclays.
“It’s in times like these when strong banks should stand tall and help ensure the stability in our economy by continuing our commitment to lend. SME leaders should know that even if their outlook is looking less clear, their bank is on their side and will support them through thick and thin.”
But in a Business, Innovation and Skills (BIS) committee meeting on 28 June, Funding Circle co-founder James Meekings warned that a £100m deal for lending to small businesses – agreed between his company and the European Investment Bank (EIB) before the EU referendum – could be scuppered by the outcome of the vote. “The programme is at risk,” Meekings said. “If I’m honest, it’s very unlikely to happen now.”
“We also had the German state development bank buy UK loans for securitisation earlier this year. Those loans were guaranteed by the European Investment Fund. In Europe we had the start of a programme for state money to help the ‘S’ in SME. These are the £50,000 loans going to firms that employ 60 per cent of the people around the country. There is a risk now. With that going, there is a hole.”
“Clearly we are going to have a period of uncertainty and instability,” added Octopus Investments founder Chris Hulatt at the same meeting.
“Entrepreneurs have been questioning: ’What does the landscape look like?’ The government needs to make sure that there is stability and consistency.”
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