Hunt for finance remains tough, RMT report finds
THE Government’s efforts to kick-start bank lending to SMEs has had a limited impact on deal activity in the first half of the year according to a major report by North East firm RMT Corporate Finance.
The Newcastle-based company has published its latest biannual SME Market Update in conjunction with The Corporate Finance Network (CFN) – the national organisation of exclusive regional corporate finance partners.
The report, which draws on the latest statistics from Experian Corpfin, found that the governmental and banking initiative Project Merlin – a commitment by UK banks to show they are open for business with SMEs – had so far had minimal impact on deals among small firms.
According to the report, the number of SME deals valued at between £500,000 and £5m in Q1 2011 was 210, compared to 232 in the same period last year.
The CFN’s member firms, meanwhile, bucked the trend in the corporate finance market with a 15% increase in deal volume in the last six months and a climb in the average deal value from £1.33m to £2.85m in the same period.
However, new bank lending to SMEs in the first half of the year is still nowhere near the level it was before the credit crisis, the report says.
It also found that payment defaults by small businesses – a clear indicator of firms having problems accessing finance – was significantly on the rise.
Suppliers continue to struggle to receive timely receipts from customers, with the reported payment performance statistics in Q1 2011 standing at 25.2 days later than agreed terms, compared to 20.9 days in Q1 2010.
Founder and chairman of The CFN, Kirsty McGregor said: “There have been several developments in the last six months, many of which surround Project Merlin.
“Within The CFN, we have not yet been convinced that any of the main bank’s proposals are having much of an impact on the SMEs that we speak to. However, this latest Market Update highlights some other sources of finance that are becoming more commonplace for us, as the mainstream lending market remains incredibly difficult for many businesses.”