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SME exporters need greater government support

Government agencies like UK Trade and Investment (UKTI) and UK Export Finance (UKEF) have been urged to do more to help SMEs.

A report published on Friday by a House of Lords Committee said the number of small and medium-sized companies supported by UKEF was shocking, with only 21 businesses helped up to August 2012.

Further findings suggested that a movement from traditional bank funding to a more centralised system has weakened bank lending to SMEs, and the committee has urged bank managers to lend to exporters to allow them to benefit from UKEF schemes.

SMEs were also encouraged to explore alternative finance routes for exporting, such as non-clearing banks, equity funding and crowd sourcing.

Lord Cope, the Committee’s chair, commented: “If we are to pay our way in the world in future decades SMEs will play a crucial role.

“The good news is that our committee were greatly encouraged by the innovation and entrepreneurship we saw and heard about from small business right across the UK.

“It was clear to us however that many potential exporters did not know what help was available to them and that the Government could do more to assist SMEs in their contribution towards export-led recovery.”

The Committee acknowledge UKTI’s good work, however it criticised slow practices and called on the organisation to raise awareness around its services using the Local Enterprise Partnerships (LEPs).

Professional advisers and trade associations like the British Chamber of Commerce and the Federation of Small Businesses were also called on to raise UKTI’s profile amongst businesses.

Lord Cope continued: “We are calling on UK Trade and Industry and UK Export Finance to blow their own trumpets and promote their services for SMEs.

“They must work with business organisations, local chambers of commerce, banks and accountancy firms to ensure SMEs who could export know where to get help both in getting started and in building their turnover and profits overseas.

“We also heard that accessing finance to export is a real challenge. We believe banks should allow local managers to make loan decisions to companies they know and work with.

“The formula based approach where decisions are made by distant executives and computers mean banks have lost important local knowledge.

“UKTI should also do more to help SMEs find alternatives sources of investment when high street banks fail to lend.”

The Committee also heard the Bribery Act 2010 may have deterred some SMEs from exporting due to confusion and uncertainty around regulations.

Members of the Committee said detailed post-legislative scrutiny was needed to review the Act and remove any barriers faced by SMEs.

Lord Cope concluded: “Overall we are optimistic about UK SME exporters. We have the advantages of the English language, of the fact that many of our citizens have links overseas and of a long tradition of trading worldwide.

“Meanwhile, the Internet is opening up new opportunities all the time. But, despite all that, small businesses need help to export. That help is there but not enough SMEs know where to find it.”

This was posted in Bdaily's Members' News section by Miranda Dobson .