SME orders and output fall

SME Trends: CBI

  • Small and medium-sized manufacturers saw orders and output continue to fall in the three months to April, though firms are expecting both to grow in the next quarter.
  • Output also fell for the fourth consecutive quarter. However, manufacturers expect output to grow slightly over the next three months.
  • Optimism about the overall business situation has steadied, following three quarters of decline. Meanwhile, optimism about export prospects rose for the first time in a year.
  • Manufacturers expect a modest increase in headcount in the coming quarter.
  • Growth in average unit costs was the fastest since October 2011, squeezing manufacturers’ profit margins once again.
  • No sign of an improvement in credit conditions

Business Bank

Business Bank launched: BIS

  • £300 million will be invested alongside private investors to address long-standing gaps in the SME finance market. This money is the first deployment from the £1 billion of new capital allocated to the business bank in the 2012 Autumn Statement. It will build on the success of the Business Finance Partnership to leverage at least the same amount in private sector investment.
  • The focus is on promoting greater diversity of debt finance available toSMEs by encouraging the growth of smaller lenders and new entrants in the market. Investments will be made via new and existing lending channels on a commercial basis.
  • New research by the National Institute of Economic and Social Research (NIESR) highlights that SMEs have been disproportionately affected in their ability to access finance as a result of the contraction in bank lending since 2008.



The CBI follows a well trodden path in suggesting that the the key to success is awareness. I’ve heard that too often. If these were such great finance offers, businesses would know about them, wouldn’t they? Word of mouth and all that. Businesses I’ve spoken to seem to be disappointed that so many of these schemes have done little except  reproduce what is already available – what is so special about offers from this new launch?

SME finance – 2012 in review

SME Finance Monitor: BDRC

  • In Q4 2012, 41% of SMEs reported using any external finance, virtually unchanged from either Q3 2012, or the equivalent Q4 in 2011.
  • Larger SMEs remained more likely to be using external finance than smaller ones, but the proportion is declining over time.
  • Half of all SMEs had some ‘personal’ element to their business finance, while a third met the definition of a ‘Permanent non seeker’ of finance, and this proportion of SMEs is increasing gradually over time.
  • The proportion making a profit was stable, but smaller profits are being reported and there has been a slight increase in the proportion of SMEs with a worse than average external risk rating

More business optimism

‘Voice of Small Business’ Index: FSB

  • Small firms’ confidence has increased, but their investment intentions have fallen – and retailers and manufacturers expect conditions to deteriorate
  • Firms cite the domestic economy, consumer demand and access to finance as the main barriers to achieving growth.
  • Small businesses expect to marginally increase their staffing levels over the coming three months
  • Financial and business services firms remain the most optimistic about the business environment
  • Eight regions have seen confidence increase year-on-year, with the north east recording the largest annual increase in their confidence reading of +15, while businesses in the southern regions retain strong optimism levels
  • Fuel (56%) and utilities (51%) remain the main driver of increased business costs in the quarter