Do we have a Government talking the talk but not walking the walk?
It does seem that the present Government and the Chancellor in particular, is very keen on headlines but the results of those headlines amount to very little or will only come about in several years time. The latest announcement is a Bank for Business. Having an idea is great but a Business Plan requires answers to such questions as when, where, why, who, what and how?
It would be interesting to scrutinise the plan for the Bank for Business and look at the answers to those key questions. I am very doubtful regarding the effectiveness of another bank when there are organisations in place that could do the job –now.
There are currently several sensible options in terms of sourcing finance for business. The problem is that these options are not promoted as clearly as they should. The government would be far more effective if their efforts regarding headlines turned to promoting and providing more support to these existing organisations.
Community Development Finance Institutions (CDFIs) exist all over the UK and they are very strong in the USA. It is their job to lend money. I have been associated with a CDFI in Eastern England for several years. Foundation East provides loans of £500 to £50,000 to existing and start up business, when those companies have been unable to obtain funding from a bank.
Since the start of this financial year FE has approved loans totalling almost £500k to organisations that faced financial exclusion and they have an abundance and variety of successful case studies. £1 million of lending for the full year is very possible.
In Essex, one of the counties in which Foundation East operates, there was, a few years ago, an unsuccessful attempt by the Council to create a Bank of Essex, which would offer loans to businesses.
The instruction now is to refer potential clients to Foundation East. Although the idea behind the Bank of Essex was worthy the fatal flaw was the lack of a strong and experienced administration and infrastructure to support the loan activity. Foundation East has been providing loans since 2004 and has an experienced personnel who manage their portfolio professionally.
I am seriously concerned that reinventing the wheel is totally wrong. I am convinced that providing more oil to wheels that are already running well and could run faster is the answer.
John Stenhouse, Director