Letter: Driving business

Bill Jamieson supports the Federation of Small Businesses' proposal for a new financial intermediary scheme to address the problems in the small business lending market but I believe companies need to change their approach to obtaining finance. (Business, 1 February).

Some companies are failing to obtain funding because they still believe they only need to provide the same amount of security and financial reporting as they did before the credit crunch.

Unfortunately, they have not fully appreciated that the lending climate has changed beyond recognition and banks are even more cautious as they anticipate more stringent regulation.

The government should accelerate their banking regulation plans, but local companies also need to improve their financial reporting and reduce risk.

To achieve this, I believe smaller companies should make a greater use of joint venturing.

Scottish Enterprise could produce a new contractual and financial mechanism to enable small and medium-sized companies to create joint venture groups. Increasing the size and diversity of these investments would spread the risk, bring more expertise to ventures and give banks greater security. The increased buying power would help companies agree lower borrowing rates with the banks.

BRIAN CLIFFORD POPE

Beechgrove Lockerbie