Patrick Wilkins, a regional director with Venture Structured Finance, gives his views on the Budget and what it means for the asset-based lending industry.
Patrick Wilkins, a regional director with Venture Structured Finance, gives his views on the Budget and what it means for the asset-based lending industry.
What do you think the most important announcement in the Budget was?
I think the reduction in corporation tax is the biggest change. It’s very encouraging for SMEs. George Osborne is saying all the right things in terms of wanting Britain to be a haven for business. He’s trying to encourage entrepreneurs, and it’s nice to hear a government actually saying that.
Were you predicting as much as a 2 per cent drop in corporation tax?
I was expecting something, but the decision to make it 2 per cent was really good. That, combined with the reduction of 5 per cent by 2015, is fantastic. The only problem is that is the economy has to grow to pay for that change, and I think a number of the new business measures are very reliant on growth in the economy.
However I don’t see what else he could have done. His announcements will encourage development, and after all growth is what is going to get us out of the mess that the previous government left us in.
What does that mean for the asset-based lending market?
Anything that encourages business to grow is going to be good for us. As an asset-based lender what we are looking for is growing businesses. A stagnant business is not a great fit for asset-based lenders. The majority of our lending is on invoice discounting, so businesses have to grow their order books in order to access more funding.
I also think it is about time to stop bashing the banks: that has run its course now. It’s all well and good encouraging growth but the government is still not doing enough to encourage banks and others to lend to entrepreneurial businesses.
Do you think that the Budget can kickstart growth?
The Budget was as good as it could have been, but only time will tell whether growth can increase. Especially for me being based in London a lot of the future will be geared around transactional deals, it’s 75 per cent of what I do. There are some signs of green shoots, but that market is very quiet still. For this to move forward it has to be kickstarted by the private equity houses, the availability of funding and the desire for people to take a risk.
Consumer and business confidence needs to be lifted for people to want to take those opportunities, and that spreads throughout the whole lending and finance sector. This Budget is a big step on the way towards building up confidence again.
Is there any change that you would liked to have seen?
I think the Chancellor’s hands are tied in terms of what he can and can’t do. We have this huge deficit and growth has been really affected by that. Despite how much the opposition laugh about it, the snow over Christmas did greatly affect a lot of industries and their numbers. Certain matters that are completely out of the control of the government such as the situation in Japan, the Middle East and the rise in raw material costs have a big impact.
If Osborne can simplify tax, which he seems to be trying to do by announcing this commission to look at combining tax and national insurance, then that will really help. However he’s only got a certain amount of money to work with and he’s done the best he could. I found it quite encouraging and I think it gives all the right messages.
Patrick Wilkins, Regional Director, Venture Structured Finance
