Access To Finance Number One Hurdle To Small Business Growth

NorfolkAccountant Accuses Business Forum Of ‘Living In Cloud Cuckoo Land’

A Norwich-based firm of chartered accountants and business advisers has rubbished a national survey that claims business rules, taxes and fuel costs are the biggest barriers to small business growth – claiming that access to finance is the most significant hurdle faced by SMEs.

James Banham, partner at Banham Graham, claims that the Forum of Private Business (FPB), which makes the claim in its latest quarterly survey, is “living in cloud cuckoo land”.  The survey even concluded that ‘local parking restrictions’ were a bigger barrier than sourcing funds.

“The FPB claims that nearly five times as many small businesses find health and safety rules a barrier to growth than access to finance – which clearly means they are not operating in the same world as most small businesses,” said Mr Banham.

“Calls by FPB director of finance Nick Palin for the Government to make removing regulatory hurdles ‘its top priority’ are badly misguided; the overwhelming need of small business at the moment is to free up finance to fund ongoing operation and future growth.”

Mr Banham also advised that small businesses could help themselves in seeking finance by ensuring they have done their homework before applying.

“We are still seeing some companies seeking credit who do not have all their ducks in a row,” he said.”  That might have been fine when banks were falling over themselves to lend.  But if you apply for credit in the current climate, and the bank has to ask you for basic things like forecasts, you are going to be turned down.”

The FPB survey asked small businesses what they considered to be the most significant barriers to growth, and according to their survey the main hurdles were:

  • Health and safety regulations (63 per cent)
  • Employment law (61 per cent)
  • Complying with other legislation (60 per cent)
  • Cost of fuel (55 per cent)
  • Tax/NI (54 per cent)
  • Business rates (50 per cent)
  • Cost of materials (25 per cent)
  • Local parking restrictions (19 per cent)
  • Sourcing funds and capital (13 per cent)