Design industry experts say firms seeking funds should consider linking up with venture capital groups rather than taking out bank loans.
While welcoming yesterday’s 0.5 per cent cut to the Bank of England’s base rate, which aims to free up lending, they said capital remained hard to come by.
Mandy Merron, partner in accountant Willott Kingston Smith, says, ‘The real winners following yesterday’s announcement are those firms that already have loans, as the cost of their borrowing has gone down.’
But she adds, ‘Banks are still incredibly reluctant to lend. My advice would be to shop around and look at venture capital firms, as this could be a good way of getting funding.’
Ian Cochrane, chairman of management consultancy Ticegroup, agrees, saying, ‘There is a lot of venture capital money out there – if you are a big group planning acquisitions, then private equity might be a good route to take.’
He adds, ‘But if you’re just trying to weather out the storm then it’s probably not the best thing to do.
‘Also, private equity groups will only really lend £5m plus – if you’re a small firm looking for around £1m you’re probably better off going to relatives, making salary cuts or factoring debts.’