SMEs urged to be catalyst for recovery from crisis

The lender, which is sponsoring the Yorkshire Post’s Excellence in Business award for companies with turnover of up to £10m, said as public sector job cuts begin to bite, the burden will fall on SMEs to create jobs and wealth.

Yorkshire Bank, owned by National Australia Bank, has been bolstering its presence in the SME market in recent months.

Earlier this year it grew its small business banking workforce and unveiled a clutch of new deals to lure entrepreneurs and start-ups.

“We’re a supporter of SMEs through both our small business and Integrated Financial Solutions (IFS) segments,” said Gary Lumby, Yorkshire Bank’s director of small business banking.

“We see that as a key business segment to grow and we want to recognise the success of businesses in these sectors in the region.

“The private sector’s role has been well publicised. It’s expected to take up the slack and growth that the Government is looking for. That’s happened to date.

“The challenge will be to get the mass market of SMEs growing and taking on those job vacancies that are created because of public sector cuts.

“Businesses now need to think, ‘This is not the normality. How do I grow my business in these conditions rather than wait for things to change?’”

In February, the bank revealed plans to boost its market share in the sub-£1m turnover business sector, in a bid to capture established businesses unhappy with their current lender and an expected flood of new firms.

Yorkshire, together with its sister bank Clydesdale, added 50 staff to create a new team of 100 small business relationship managers across the UK, specifically targeting this sector.

The small business proposal is administered through their network of 72 business banking centres, 340 branches, plus call centres and online.

Yorkshire’s expansion in the small business market will target the 3.9 million small business banking relationships in the UK.

The lender is targeting businesses with turnover of up to £1m, although extending to £3m in some cases, which require financing of up to £250,000. Larger businesses are referred to financial solutions centres.

Mr Lumby, a banker of more than 30 years and president of the Leeds, York and North Yorkshire Chamber of Commerce, said the proposition has been “very well received”. However, he added many companies are being cautious as they wait for conditions to improve.

“Not all of them want to borrow. Demand for lending is not as strong as it has been in the past because businesses are being cautious.

“It’s going to be a long, hard period. There’s some fantastic businesses out there that are doing well but a lot of them are in advanced manufacturing, particularly those that are exporting.

“Businesses have gone through a really tough two to three years and in the main have survived. But it’s going to continue to be difficult – particularly if you’re not an exporter – to look for ways of growing your business.”

Despite this, Mr Lumby said the bank’s small business lending book grew in February, March and May. “In this environment that takes some doing. It shows we’re open for business.”

He said the bank is supporting the Yorkshire Post’s Excellence in Business Awards because they reflect the diversity of the region’s businesses, as well as their achievements.

“We see these awards as a perfect fit for what we are all about,” he said. “That is supporting businesses, recognising their success and helping them realise their potential. When you couple that with the Yorkshire Post’s brand, it makes perfect sense.”

He added the awards can also help encourage the next generation of entrepreneurs.

“One of the strengths in Yorkshire is the diversity of the business community. But conversely, it’s an area that’s never fully developed its full potential around enterprise. That’s the reason why the Yorkshire Post’s awards are important.

“The region needs to do better in terms of the number of start-ups and growing companies.”

Yorkshire Bank aims to capitalise on what it sees as a retreat from the small business sector by bigger rivals and the Irish lenders.

It hopes the foray will extend the bank’s market share of small firms beyond its current three per cent level.