Business News Round Up (16/05/2022)
Lending to small businesses hits all-time low, FSB report reveals
Bank lending to small firms is at a record low, according to the latest Small Business Index (SBI) from the Blackpool-based Federation of Small Businesses (FSB). And it warns that the sector is facing strife with many planning to downsize this year, driven by late payments by customers. The FSB says fewer than one in 10 (9%) small firms applied for finance in the first quarter of 2022, the lowest proportion since SBI records began. The share that saw applications approved (43%) is also at a record low. The number of respondents describing the availability of credit as “good” (19%) has tumbled to its lowest point since 2016. A minority (44%) of successful applicants were offered a borrowing rate of up to 4% in the first quarter – the figure is down 32 percentage points on the same period last year. Of the few firms that did manage to secure finance, four in ten (42%) plan to use credit to manage cashflow, considerably more than the numbers planning to use funds for equipment updates (21%), expansion (19%) or recruitment (4%). The majority (61%) of small firms were impacted by late payment of invoices over the first quarter of this year. A quarter (26%) say the propensity for late payment is growing – close to one in ten (7%) experienced late payment for the first time in Q1 of this year.
Scotland ‘only fifth’ for inward investment – CEBR
New data has challenged Scotland’s claim to be the most popular destination for foreign direct investment (FDI) outside London. A report produced by the Centre for Economics and Business Research (CEBR) indicates that in 2020/21 Scotland secured 92 projects, behind London with 492, the South East (163), the West Midlands (145) and North West England (139). Scotland also suffered the second biggest percentage fall (24%) on the previous year, only marginally better than Northern Ireland (28%). Law firm Irwin Mitchell’s UK Powerhouse report comes as First Minister Nicola Sturgeon is in the US to promote trade links with Scotland and just a week after the World Forum for FDI was held in Edinburgh. The report also reveals that eight of the top 10 fastest growing city economies by the end of next year will be in the South or East of England. It states that the Government’s levelling up agenda will fail to take off unless more is done to help local economies outside of the South East attract Foreign Direct Investment (FDI) and diversify towards faster growing sectors. The report says that out of the 50 locations included in the study, over half of the slowest growing economies are expected to be in the North of England. Warrington is expected to be the fastest growing city in the North by the end of next year, but it only comes in 20th place.
UK small business owners struggling with pandemic mental health hangover
Two out of five (40%) small business owners believe that their emotional recovery from the pandemic will take much longer than that of the financial disruption. And, according to a new study by Xero, the global small business platform, those investing in wellbeing initiatives were more likely to hold on to staff and grow revenues. Nine out of 10 (92%) small business owners experienced symptoms of poor mental health over the last two years, according to the study with the Centre for Economics and Business Research (Cebr) and Opinium. Professional responsibilities played a significant part, with more than half (52%) said that running their business has contributed to those symptoms. The pandemic was the greatest cause of poor mental health, for over a third (37%) of respondents, but issues such as cash flow (24%) and the cost of living (24%) also had an emotional impact. The increasing pressure of the pandemic made it difficult for small business owners to prioritise their own wellbeing. Three out of four (75%) didn’t take a single sick day or didn’t feel they had the option to, with those that did taking an average of just one day each. Of those who suffered poor mental health, only one in five (21%) took any leave. Despite limited time for wellbeing, only half of business owners (55%) know where to turn for mental health support. And while the government provided financial assistance, only 15 percent believe they were doing enough to help them with their mental health and wellbeing.
Debt decrees against Scottish businesses up by 52%
Scotland saw a 52% increase in decrees against businesses in the first quarter of 2022, compared to the same period last year. The total value of these judgments also rose by 269%, from just under £2.1m to more than £8m. Registry Trust, the not-for-profit organisation which maintains the Register of Judgments, Orders and Fines for the UK & Ireland, has released its latest monetary judgment statistics. There were 230,239 new monetary judgements processed overall in UK & Ireland – a 10% decrease year-on-year. However, while the number of consumer judgments fell, there was a significant rise in county court judgments (CCJs) and Scottish decrees against businesses. A decree is incontrovertible proof that business debt has not been managed. Registry Trust chair Mick McAteer said: “Although there was a welcome fall in the number of decrees registered against Scottish consumers in the first quarter of this year compared to the first quarter of last year, there is no room for complacency, as the full impact of the cost of living crisis is yet to be felt by households. “The significant increase in the number and value of decrees against Scottish businesses is a cause for concern and reflects the serious challenges they face in the current economic climate.”
https://www.insider.co.uk/news/debt-decrees-against-scottish-businesses-26973931