At the start of 2013 small and medium sized businesses accounted for 99.9% of all private sector business in the UK yet it was arguably these SMEs who struggled the most last year.

Business reports in January 2013 looked promising with around half of SME business owners planning to expand their companies throughout the year. However, a constant difficulty facing SMEs has always been access to capital particularly with regards to the relationship between SMEs and the ‘big banks’. The, ‘Funding for Lending’ program to better reform the banking, originally started in 2012 came under severe scrutiny last year with SMEs feeling that the reforms would actually make it more difficult for small businesses to borrow money.

Cash flow issues

Continuing to question the banks’ relationship with SMEs in 2014, is the knock on effect from last year as around 46% of businesses in the sector experienced cash flow problems, having a detrimental effect on lending relationships with banks. These cash flow problems seem to have come from unanticipated fee rises throughout the year, for example energy and council tax rises forced many businesses to backpedal their intended expansions.

There was also a general feeling last year that business rates were too high for SMEs to sustain themselves and that changes to the tax system in early 2013 saw as little as 3% of businesses believing that the changes made no positive difference to their company and left the rest feeling crippled. It was seen as an extraction of money that showed no conceivable benefit to the taxpaying company, and in turn exacerbated already difficult financial relationships.

Positives

The positives of last year are from other lending possibilities, regional funding and venture capital companies. It was shown that the government planned to introduce a state-supported bank similar to angel lenders that was well received by more than half of UK SMEs. These lending opportunities and the contacts you need can be found from the Federation of Small Businesses websites which offers clear, helpful advice to you.

The Insurance Octopus is glad to point you in the direction of articles that have all the information you need for your SME and can help identify the necessary cover you need. We offer a range of insurance information for all types of SME businesses in the UK, including which particular policy cover is right for you.