With interest rates so low there has never been a better time to borrow. In theory at least.

Equally, even though the recovery hit a speedbump in the last quarter, the recent figures from the service sector suggest that the dreaded double-dip recession will be avoided.

On top of these, in a recent appearance before the Treasury select committee, Barclays chief executive Bob Diamond told the nation that the bank was committed to increasing lending to SMEs in 2011, provided they were "credit-worthy".

If it all sounds too good to be true, that’s because, sadly, it is. If you’re looking for the catch, Diamond’s wonderfully ambiguous promise is it. Credit-worthy businesses – as the term implies – do not have problems getting credit. However, businesses with limited trading history, or with below par credit scores do.

There are many businesses, across all sectors, that are complete basket cases from a credit point of view and, given that it was a borrowing binge that got us in this mess, it’s unlikely anyone would advocate a return to reckless lending. What is required is a supply of credit to firms that occupy the middle ground between credit-worthy and basket case, that are struggling to fund their growth ambitions, and that will prove vital to both job creation and economic growth.

Perhaps nowhere in print is this need for credit more apparent than in the digital sector. There is an almost daily demand for new digital presses, be they wide-format, high-speed inkjet, or mid-market mono and colour production engines. It is this last category that is crying out for a sub-prime lender. However, for any to prosper they would need to be able to make an accurate assessment of the risk involved in underwriting any particular deal – a feat that is currently near impossible.

Risk-takers required
"Nobody at the start of a deal will give you a guaranteed buyback if the deal goes wrong," says Fujifilm digital solutions sales manager Mark Stephenson. "It’s a very fluid market and the technology gets superceded very quickly. It’s not like heavy metal – it’s unpredictable and that means no-one will take the risk."

Getting around this takes a bit of lateral thinking and Stephenson says that Fuji has sold digital presses on a loss-of-discount deal in the past with the funds raised against a plate deal, for instance. Meanwhile, Michael Morris, managing director at Oasis Printing, which installed a Presstek 34DI press last April, says he didn’t even attempt to secure finance during "one of the worst recessions since the 1920s". Instead, he went directly to his bank and secured the funds against the freehold on the firm’s property. "I wanted an agreement to cover five years not 10 years and with no deposit, which is why I went to Lloyds directly," he says.

According to Wayne Barlow, director of professional print at Canon UK, any start-ups or printers with sub-level accounts will find it "very difficult" to get any level of credit, if at all. "Even if accounts are good they would have to commit to director guarantees and/or large deposits," he adds. Firms hoping that a sound business plan will work in their favour are likely to be disappointed. "It’s all about what’s on the books and what assets you have," says Stephenson.

"I had a client who had come out of a rough patch so the books didn’t look that great, but they genuinely had a great business plan and I was told: ‘look, this isn’t Dragons’ Den’."

The lack of a lender to meet this demand has attracted the attention of print’s largest lending body, Close Print Finance. By its own admission, it does not have the answer as yet; however, given the banks’ complete ambivalence to print, something needs to be done. Even for credit-worthy print businesses, finance for a digital investment can be a problem. Steven Brown, director at Your Print Solution, said financing a recent £350,000 HP Indigo investment proved to be an "incredibly difficult" period for the company and one that nearly put a halt to the investment altogether. "It seemed that everybody was saying ‘no’ and then once somebody gave us a ‘yes’, everybody changed their tune," he says. "I don’t think that banks are particularly friendly towards SMEs. There is a risk in everything and I can sympathise to a degree, but I can also be very pissed off with them too."

Brown’s frustration will be shared by many, but there is hope that Close, working with the major manufacturers, will find a solution to this problem. It too is committed to increasing lending and, unlike Barclays, understands that the people in greatest need of credit are those who are struggling to access it.

---

30-SECOND BRIEFING
• Interest rates are currently still at a record low, although mounting inflation means that this is unlikely to last, making now the ideal time to borrow. The disappointing slump in GDP last quarter has been countered by recent positive figures from the ONS on service sector output, giving renewed confidence in the economy
• Banks are still a closed shop to many firms, however. Despite promises to the contrary, lending to SMEs is likely to remain stilted until 2012 or beyond. This is causing major problems for businesses looking to invest now to take advantage of the opportunities that will come with the return to an economic growth cycle
• Digital equipment finance is particularly difficult due to the lack of residual value in the asset compared with litho. This is restricting printers’ ability to invest in digital technology and has led to interest from Close Print Finance, which is now welcoming discussions with digital manufacturers with the aim of bridging the funding gap