How Growth Street is transforming the overdraft for East Anglian SMEs
Growth Street, who are transforming the business overdraft, are currently providing just under £7.5m of overdraft-style credit lines for growing businesses in East Anglia.
It bucks the national trend which, since the financial crash in 2008, has seen the banks dial back the amount they lend to SMEs in overdrafts by 50%. Yet, in that same time, the number of UK SMEs has risen 30%.
Across the East of England, Growth Street has identified a funding gap of over £1.5 billion due to the banks’ increasing reluctance to extend overdrafts to small firms.
To help plug that gap, the overdraft-style provider has committed to channelling £75m to East Anglian SMEs – and they are already 10% of the way there.
One of the SMEs to have benefited from the firm’s new take on the overdraft is Cambridgeshire’s own Lunchtime Company, who found themselves with a squeeze on their cashflow that the banks weren’t willing to support them with.
As a provider of school lunches, the Lunchtime Company unsurprisingly experiences a lull in their cash flow over the summer break. However, it’s during this slowdown in demand for their meals that the business also looks to invest to be ready for the new academic year.
To fill the hole, the firm initially applied for an overdraft from the bank. They are a strong business, with long periods of six-figure payments throughout the year, a sound balance sheet and a profitable trading history. However, due to the seasonal nature of their trade, the bank was still unwilling to extend them the money they needed.
Andy Phillips, Growth Street’s East Anglia representative:
– To have already agreed just under £7.5m of funding lines for East Anglian SMEs is a great start, but there’s still a long way to go to plug the gap left by the banks.
– As someone who has been supporting SMEs in East of England since the late 1970s, I’ve seen first-hand how the banks have stopped offering overdrafts of any great value. When I started out in business finance, the banks would have been more than happy to extend a good business like Lunchtime with a big overdraft, but that’s not how things are anymore.
– That’s why I joined Growth Street: to deliver the time-tested, overdraft-style facility that SMEs need, but with modern tech to bring it into the 21st century.