The ubiquitous subject of small and medium businesses and the availability of funding was discussed in depth at GovKnow’s Supporting Business for Growth event last week, with speakers from across the financial spectrum discussing the various avenues open to expanding SMEs.

A packed programme saw a number of prominent figures from both governmental positions and the specialist lending industry, attempt to unpick the on-going issue that is opening up funding for smaller businesses.

First to speak was Paul Fisher, Executive Director of Markets at the Bank of England, who examined the ideologies behind the Funding for Lending (FLS) scheme and its recent extension.

His primary concern was that the scheme was intended to stimulate the economy rather than to to alleviate the pressure on struggling banks, and that fundamentally, it was not the Bank of England’s role to fund banks’ lending.

Paul added that, though it appeared that banks were not lending and that the FLS was as a result, unsuccessful -many were using the funds to service their legacy portfolios, allowing them to lend to borrowers, such as small businesses in the future.

At the same time, he said, there were “interesting things happening in the non-bank lending market”, especially when considering the rise of challenger banks.

FLS’ attempts to include non-bank credit providers, such as leasing and asset financers and specialist mortgage lenders, had been largely successful, said Paul, and the Bank’s policies were always designed to create a more competitive funding sector.

Philip Monks, CEO of Aldermore Bank, then addressed the crowd about his firm’s unique position as one of the most successful challengers to the banking industryfrom the past few years.

He said that at the core of Aldermore’s proposition, was the intention to support high quality businesses that will grow and support the economy, but that this was only possible with a level playing field for all banks. With this in mind, he called for the lowering of capital requirements for newly-launched banks, as many unestablished institutions might need double the liquidity of big banks in order to lend to some customers.

Philip highlighted his belief in the role that technology would have in the SME funding future, adding that successful new entrants to the industry were likely to be those who exploited emerging online platforms most efficiently.

After some insight into the opportunities offered through financing a firm’s exports, Lord Young, the Prime Minister’s Enterprise Advisor, outlined the Government’s current concerns regarding business funding.

Despite a Government report in 1971 claiming that the SME would die out, their numbers have grown from 700,000 in 1971, to 2 million in 1980 and reaching 4.8 million in 2012.

Of these, 3.6 million are sole traders, with 98 per cent employing fewer than ten people.

Lord Young went on to say that most of these enterprises do not search for a loan, though they may need it - as they do not know how to ask for one.

Through using the Business Bank initiative more effectively, in particular making help available to firms on a more local and personal basis, then the more of over £730 billion worth of unspent capital in the country could be made full use of.

He added that the UK needs to return to an age of confidence in lending, which was only a matter of psychological change. “Whenever I go around the country, I am filled with nothing but optimism for the future of any number of small and medium sized businesses”, he concluded.

Adam Tyler, Chief Executive of the NACFB, took to the stand to remind attendees of the important role that the trade body plays in linking up businesses in search of finance with appropriate and well-trained intermediaries.

The latest statistics showed that, since the economic crash in 2009, NACFB members had been lending increasingly more in a number of sectors to businesses. In leasing and asset finance, in particular, the Association’s representatives had doubled their lending from £1 billion to £2 billion, a phenomenon that Adam attributed to improved knowledge and education regarding the sector.

Among the innovations promised by the Association included the recently-unveiled Small Business Finance Directory. By filling in a short checklist, businesses are presented with the best broker to source appropriate finance for them, one who both suits a firm’s needs and is geographically convenient.

Adam also revealed that the NACFB was targeting integration into the Government’s Business Bank initiative, and hoped to work with the Department for Business, Innovation and Skills to make more capital available for SMEs.

To round off the day’s proceedings, Toby Perkins, Shadow Minister for Small Businesses, outlined the Labour party’s plans to introduce a system of regional banks, focused on lending to businesses and enterprises within a rigidly defined geographic area, and on promoting growth and innovation.

Inspired by the German Sparkassen system, such regional funders would act as local delivery arms for the British Investment Bank and the foundation for a so-called “One Nation economy”.

He told delegates: “The British banking system is astonishingly uncompetitive: 89 per cent of all our businesses are dependent on the five major clearing banks. Yet, over the last 30 years, these banks have become disconnected from the needs of these businesses, seeking quick profits in the City and in the property markets rather than long term investments in the industries and regions outside the South-East.”

Both such an initiative and the day as a whole carried with them a firm message: the creation of a competitive funding market in which institutions would truly compete, will be integral to securing the growth of this country’s economy.