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After the Tsunami of Initiatives

The government is producing one initiative after the other to help arrange finance for small businesses. The list is endless and I am happy to admit I am one that is not jumping for joy.

Their new “brilliant” idea: “Credit Easing”. If it is as complicated as the EFG scheme we are likely to have another failed initiative to add to the list.

Its apparent most of the schemes are just so riddled with red tape and complications it automatically discourages businesses to apply. Take for example a quote from a government publication. “Community investment tax relief accredited Community Development Finance Institutions are able to raise lending capital through the Community Investment Tax Relief Scheme” – if you understand please contact me.

I wonder if the Government should leave the lending to the banks and the borrowers and should just concentrate on creating conditions which make people want to do business and the borrowing and lending will follow automatically. The fact is that the SME sector has currently net cash on deposit because it has learnt that over gearing is not sensible. The other fact is that weakening world economies, deepening doubts over the competence of business leaders, confusing messages from politicians do not increase confidence. Confidence is the key motivator for small businesses to invest – they will do so when they see a benefit for the business operation; they will not do so just because a politician has a great idea.

If you want to study more initiatives, what about the following : Enterprise Guarantee Scheme, Independent Commission on Banking, Local Enterprise Partnerships, Enterprise Capital Funds, Project Merlin, Lending Standards Board, Capital for Enterprise Limited, Community Development Finance Institution, Community Development Finance Association, and so on.

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