Beyond the Banks: Lending for growth

On July 19th, I hosted an event on access to finance for small business in partnership with the Daily Telegraph and NESTA, the innovation Think Tank. The event kick-started a consultation on creating alternatives to bank lending for small business, to help promote growth alongside the Government’s measures as part of the Plan for Growth and I am looking to put proposals to the Treasury in the Autumn. Following my budget speech back in March, I have been working on improving access to finance for small businesses. In my view bashing the banks will no longer cut it. And taxing them into submission will not drive a private sector-led recovery. We need to change the lending game so there is more choice and competition in the market. But waiting for new banks to set up and grow organically might take too long, given the high barriers to entry in small business banking. This is because a new entrant needs to have a large geographical footprint, offer current accounts and invest in the appropriate infrastructure to make a serious impact on the market. So what we need is game-changing innovation to give small business the advantages that ordinary consumers and big businesses have when it comes to accessing finance. Ordinary consumers do not rely on their primary bank. Consumers have access to hundreds of lenders for loans, mortgages and credit cards and they can compare rates and switch providers relatively easily. Big business can access cheaper finance directly from investors who do not have the cost-structure of traditional banks. And this is why game-changing innovation is needed in the small business lending market; to improve choice, increase competition, drive down costs and increase the flow of credit. The event was a great success with around 150 people in attendance from the finance and business worlds which provided an excellent forum for debating the issues around small business finance. It was also an excellent networking event for small businesses to meet those who provide alternative sources of finance to the banks. I was delighted to receive an email shortly after the event from a constituent who as a result of attending the event, had secured finance to grow his small business. This is exactly what I am hoping to achieve through this project as small businesses are a vitally important part of the East Surrey economy. Below are links to some of the press coverage so far, with the objective being to develop concrete policy proposals for the Treasury by the Autumn. If you know anyone who could have an input, do let me know by emailing me at sam@samgyimah.com. On the day event (July 19th), I was featured in an article in the Business section of the Daily Telegraph: http://www.telegraph.co.uk/finance/businessclub/8646077/Bond-market-for-small-businesses-proposed.html I also wrote a piece for the Daily Telegraph website, outlining what I hope to achieve through this project: http://www.telegraph.co.uk/finance/businessclub/8636921/Innovation-needed-to-change-the-lending-landscape.html Write up of the event by NESTA: http://www.nesta.org.uk/library/documents/BeyondtheBanks.pdf