Funding scheme to help small firms unlock potential

Recent figures have suggested that initiatives such as quantitative easing and the Bank of England’s £80 billion Funding for Lending Scheme have failed to make cash available for thousands of small and medium-sized enterprises (SMEs) looking to ride out the economic storm.

Business bodies have attacked Britain’s big banks for using the supply of cheap money to bolster their balance sheets rather than pass on the benefits to companies.

However, two separate forms of alternative financing about to be rolled out may provide the answer to those firms’ funding needs.

Under the first initiative, Scottish Enterprise has commissioned Metis Partners, a Glasgow-based intellectual property (IP) practice, to help businesses unlock the funding potential in their IP.

The study, which its backers described as “groundbreaking”, mirrors moves in technology-rich Asian countries including Malaysia and Singapore to tap into firms’ assets.

Various government-backed funds have been set up to lend to SMEs based on the value of their IP, rather than against traditional assets such as machinery or property.

Metis chief executive Stephen Robertson, who founded the business ten years ago, said he would be working alongside Scottish Enterprise to develop a template that banks could use to make “informed lending decisions”.

He said: “Metis has, through numerous IP diligence exercises, the ability to generate substantial investment finance for companies throughout the UK.

“We hope to demonstrate that there is real value in these IP assets that can help leverage finance and funding to support Scotland’s SMEs.

“We will be working towards a template or standard valuation methodology that will be acceptable to lenders.”

He added: “Our efforts reflect recent comments made by the British Chambers of Commerce and the CBI on the pressing need for access to SME finance for growth.”

Robertson said Metis had already worked with a number of businesses, including artificial limb developer Touch  Bionics, to monetise IP assets in the form of bank lending totalling £20 million.

The work with Scottish Enterprise to develop a formalised model would likely see the lending extend to industry sectors beyond technology. Robertson pointed to an increasing willingness on the part of banks to recognise IP as an asset class in its own right.

Meanwhile, a franchise business which is now expanding into Scotland aims to help the growth of SMEs experiencing cash-flow concerns.

Interface Financial Group was established in Canada in 1972. It allows a “qualified” company to use its unpaid invoices to accelerate cash-flow by buying single invoices at a discount, giving rapid access to the cash.