If you run an SME in the West Midlands, the likelihood is that you are a “happy non-seeker”.
This is research speak for those SMEs that have not had a “borrowing event”, which itself is research speak for companies that have not sought to borrow funding for 12 months.
The findings are embodied in the most comprehensive survey ever conducted on bank finance. It was carried out by BDRC Continental, the UK’s largest independent research consultancy, and was the result of one of the commitments made in the report of the British Bankers’ Association’s Business Finance Taskforce in October, 2010.
The first report of the SME Finance Monitor gives regional data covering nine English regions, including the West Midlands, Scotland, Wales and Northern Ireland.
The independent chair of the group, Mike Young, says: “I believe this will be a valuable resource for local business organisations to help them to establish facts about how SMEs in their area are financing themselves, their success rates and any barriers that they feel they face.
“I very much hope that regional and sub-regional bodies will use this dataset to help them develop effective policies to help SMEs in their area. Such businesses are vital to local and national economies and they deserve properly focussed and effective policies.”
We can all endorse that. But what does this report tell us about SMEs, defined for this survey as business with up to 249 employees, in the West Midlands?
It concludes that the majority of SMEs in the region are smaller than elsewhere, are marginally more prepared to take a risk and are as likely as businesses anywhere to make a profit although the median profit is slightly below average.
The owner manager is likely to be younger than elsewhere although the financial decision maker is more likely to have financial qualifications or training.
But, getting down to the nitty gritty, it says SMEs in the West Midlands are slightly less likely to be using external finance currently, 43 per cent against 46 per cent nationally.
They are also more likely to qualify as a “permanent non-borrower” which is why they are categorised as a “happy non-seeker”, 74 per cent against 73 per cent nationally.
Thirteen per cent had a “borrowing event” in the 12 months before the report against 15 per cent.
In the fourth quarter of last year, West Midlands SMEs were more optimistic than those in the rest of the country (52 per cent against 44 per cent were planning to grow).
Other statistics to emerge from the survey are that more SMEs in the West Midlands thought the economic climate was a “major obstacle” in the next year (37 per cent against 35); there were more “happy non-seekers” of finance (75 per cent against 66); and another category, “would-be seekers”, were most likely to cite the current economic climate as the main barrier to future finance applications and at 47 per cent they were as one with the rest of the country. On the other side of the coin, so to speak, most banks will tell you that they have an appetite to lend and balance sheet capacity to do so.