Beyond the Banks: Credit Easing Event

On Monday I co-hosted an event with NESTA to discuss how Government intervention (Credit Easing) can help get much needed finance to the real economy. Appearing on the panel alongside Xavier Rolet, Chief Executive of the London Stock Exchange, and Will King, founder of King of Shaves, the event produced a lively debate and further highlighted why the market for lending to small businesses is in urgent need of reform. We (NESTA & I) will be submitting recommendations from the consultation, which has been running since July, to the Treasury ahead of the Chancellor's Autumn Statement on 29th November.You can watch the start of the event and my opening remarks below:

More videos from the event can be found under NESTA UK on Vimeo.

Beyond the Banks: consultation update

The latest news on the Beyond the Banks consultation can be found here:

http://www.telegraph.co.uk/finance/businessclub/beyond-the-banks/8818962/Credit-easing-scrutinised-by-Beyond-the-Banks-panel.html

Credit Easing - why the Chancellor is right

On Monday, the Chancellor of the Exchequer made an extremely important speech about Britain's economic future. In introducing the idea of 'credit easing', he recognised that the Government needs to do more to help small and medium businesses access the credit they need to grow. This is a point I have been making since July (see my previous blog posts below), when I launched the Beyond the Banks consultation with NESTA.

My latest article on the subject, available here, further explains why we need to explore alternatives to bank lending, as well as considering some of the policy challenges that lie ahead. I look forward to making further contributions to this debate over the coming weeks.

Beyond the Banks: my response to the Vicker's Report & the latest Bank of England lending figures

Last week the Independent Commission on Banking (ICB) published their recommendations for reforming the banking sector, to ensure the financial crash of 2008 is never repeated. The report is an excellent step forward, but much more needs to be done if we are to see businesses creating jobs and driving economic growth. You can read my thoughts on the report here:

http://www.growthbusiness.co.uk/channels/raising-finance/debt-finance/1656853/beyond-the-banks-lending-for-growth.thtml

Improving access to finance for small businesses

---- UPDATE (9th Aug) - LSE supports bonds initiative: http://www.telegraph.co.uk/finance/businessclub/8684973/LSE-supports-bonds-initiative.html ----

---- UPDATE (19th July) - Article in Business section of today's Telegraph: http://www.telegraph.co.uk/finance/businessclub/8646077/Bond-market-for-small-businesses-proposed.html ----

--- UPDATE (14th July) - My article on Telegraph online: http://www.telegraph.co.uk/finance/businessclub/8636921/Innovation-needed-to-change-the-lending-landscape.html ---

Following my budget speech back in March, I have been working on improving access to finance for small businesses.

On July 19th, I am hosting an event on bank lending in partnership with the Daily Telegraph and Nesta, the innovation Think Tank. The event is to kick-start a consultation on creating alternatives to bank lending for small business. Currently, the banks claim there are not enough good businesses to lend to. And yet scores of good businesses find the banks reluctant to lend, processes too long and fees too high. This is why we need real innovation to change the lending landscape to get businesses the finance they need to grow and create jobs.

The post war era spawned 3i and the early 1990s recession spawned AIM. We need to find new solutions for a post-credit crunch environment, in which small businesses have one of only 5 major banks to choose from. And the purpose of this consultation is to develop policy proposals and contribute to the wider discussion, starting with the views of the entrepreneurs and business owners at the coalface. So, join our experts for an 8.30am breakfast meeting on July 19th to have your say.

An advert for the event appeared on page two of today's Daily Telegraph Business Section: Click here to view the advert

James Hurley, the Editor of the Daily Telegraph's Business Club has published the following article accompanying the advert: http://www.telegraph.co.uk/finance/businessclub/8618902/High-growth-firms-most-likely-to-face-financial-restraints.html

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

Budget 2011: A Budget for Business

My speech in the budget debate, delivered on 24th March, focused on the second objective of the Chancellor's plan for growth; to make the UK one of the best places to start, finance and grow a business. Most of the changes made will not make the headlines like the 1p cut in fuel duty, but have the potential to turn the UK into the start up capital of Europe - a destination for investors looking to invest in fast growing businesses and entrepreneurs looking to start new businesses and create jobs.The survival and success of start-ups is a vital issue for public policy because the 4.8 million SMEs in the UK are responsible for 50% of private sector output and 60% of the jobs. Also according to NESTA, 50% of the jobs in the private sector are created by 6% of the fastest growing companies, which is why I welcomed the measures to help these companies access finance, innovate by investing in research and development, and reward the endeavour and enterprise of those individuals who successfully start up and build these businesses.

Drawing on my own experience, I know how critical it is for small fast growing businesses to get funding to expand and take people on. The policy debate has focused on bank lending but banks typically don't want to lend to these businesses, because their revenue and cashflow profile can be unpredictable which, in the absence of any collateral makes them risky for banks to lend to. We also know that in the UK raising sums of up to £2million in equity (risk capital) is particularly challenging, which is why it was right that the Budget simplified and expanded the rules around the Enterprise Investment Scheme, exempted new businesses from a raft of regulation and raised entrepreneurs relief from £5 million to £10 million; sending the signal that we want to encourage the spirit of adventure essential to business success, and reward the enterprise and endeavour of those individuals who take risk, build businesses and create jobs.

If we want to create the next Lastminute.com, the next Vodafone and the next Dyson, we need to back those with the ideas to take the plunge and this budget does precisely that.

The text of my speech is available at:

http://www.publications.parliament.uk/pa/cm201011/cmhansrd/cm110324/debtext/110324-0003.htm#11032467001617

And a video at: http://www.parliamentlive.tv/Main/Player.aspx?meetingId=7926&st=15:11:37