Accountants could be vital link between banks and companies

The new SME Access To Finance Research Report, published by the Institute of Chartered Accountants in England and Wales, suggests that accountants can play a key role in improving links between banks and businesses.

Jeremy Oliver, corporate finance director at Yorkshire accountants Garbutt & Elliott, which has offices in York and Leeds, welcomed the report as "instructive and stimulating".

Mr Oliver said: "Chancellor George Osborne recently told Parliament that bank lending to small businesses is at the top of the list of issues he is monitoring. He is right to focus on SMEs, (small and medium-sized enterprises) – their growth will drive the UK's economic recovery.

"Clearly, financing that growth requires a good relationship between banks and businesses – yet this report suggests their relationship is breaking down.

"As accountants, we are in a unique position to assess this relationship.

"We advise SMEs on how to approach banks, and where else to find finance when banks are unable to lend. We also have tremendous contacts with the banks themselves," he explained.

The report makes recommendations on how relations between banks and businesses can be rebuilt, and how to improve access to finance overall.

It suggests that relationship managers dealing with SMEs should be empowered to take local decisions, fostering deeper

relationships with their SME clients.

Applying for loans should be a more transparent process, the report states, and banks should explain why applications are declined.

SMEs need to demonstrate good financial management when applying for finance. They can also work with their accountants to strengthen their applications and find alternative sources of finance if required.

The report also revealed that Government-sponsored funding schemes are recognised as well intentioned, but they are felt to be too complex, too little publicised and not attractive enough.

The HMRC tax deferral scheme has been well received, but SMEs are also calling for changes relating to corporation tax, Capital Gains Tax, and tax credits.