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2 November 2012 | Adam Leach
Supply chain finance is “fashionable and sexy but very small, relative to SMEs’ needs”, according to CIPS economist John Glen.
The government supply chain finance scheme – announced last week – will help SMEs, but against a broader backdrop of faltering initiatives it is unlikely to give them the funding access they need, he told SM.
Glen, who is senior lecturer of economics at Cranfield School of Management and is the newly appointed CIPS economist, said the initiative – launched by Prime Minister David Cameron – was “another attempt to solve the problem of SME funding”.
While he welcomed the principle, he questioned how significant the impact would be. “To me it smacks a little of crowd funding, which is fashionable and sexy, but very small relative to the SMEs’ needs.”
Glen said it is unlikely to deliver the kind of funding SMEs require to pursue real growth opportunities. He said it follows on from a series of similar schemes launched by the government to try to stimulate funding access for SMEs, such as Funding for Lending and the National Loan Guarantee Scheme. He also cited the fact that banks failed to meet the ‘Project Merlin’ target of lending £76 billion to SMEs as further evidence that efforts to increase funding to smaller businesses in the UK are struggling.
“What we really need is for banks to start supporting the real growth opportunities of SMEs,” he said.
☛ Read more of John Glen's view on the supply chain finance scheme here