Increasingly sensitive to the accusation that the Government has not done enough to help small and medium-sized enterprise get access to finance, Vince Cable has begun the year with the launch of yet another task force. Legal & General chief executive Tim Breedon has been asked to investigate alternative sources of finance to bank lending, with submissions to his inquiry due by the end of this week.
One understands what the Business Secretary is getting at. Even if the banks are doing better than they were, total lending remains down – not least because so many foreign banks have pulled out of the market. While there some innovative alternatives emerging – peer-to-peer lending looks especially interesting – they are small scale for now. Mr Breedon's expertise is very much needed.
Still, why is the Government's focus on small business finance seemingly always so concerned with debt? Why not also think about how to encourage investors to offer growing businesses equity capital?
It's not just that all the new initiatives are debt-focused, but also that the status quo already acts as a brake on equity investment. While capital gains on such investments are usually taxed at punitive rates, the tax system offers business an incentive to borrow, because interest payments can be set against income tax bills. This is why companies of all sizes came under pressure from shareholders to raise their leverage – until the credit crunch came along and caught so many of them out.
There are some schemes out there designed to reward investors in small businesses. Venture capital trusts, for example, now more than 15 years old, offer a range of tax breaks. The Enterprise Investment Scheme operates on similar principles. Neither VCTs nor the EIS are transformational, however. And other initiatives get little publicity. The Business Growth Fund, financed by the banks and promoted by the Government, is a worthwhile initiative, but is only just getting going – and it's had far less fanfare than, say, the Green Investment Bank, which has no more money and is miles off making its first investments.
Indeed, the loudest noise in SME equity investment remains, by some distance, a television programme, the BBC's Dragons' Den.
It is within the Government's power to change this: if George Osborne's March Budget really is going to be a programme for growth – and the Chancellor insists growth must come from small businesses – a good place to start would be with encouraging equity investment.
One big opportunity has already gone begging. Although the idea was written off as too radical, it would have been perfectly possible to turn one of the banks that had to be nationalised during the crisis into a small-business specialist. What a pity we didn't rise to the challenge.
Growth opportunity: African Land float offers chance to harvest returns
Coming soon to the Alternative Investment Market: an unusual opportunity to invest in West African farming.
African Land has begun negotiations with potential advisers on an IPO it expects to launch within the next couple of months.
The company offers exposure to its land bank in Sierra Leone, where it has around 33,000 acres of farm land, and neighbouring Liberia, where it leases an additional 30,000 acres.
It is effectively an investment fund, offering investors returns comprising income from the annual harvest on cereals grown on the farms and capital gains from appreciation in the value of the land.
Robert McKendrick, African Land's chairman, says Western farming technology has already enabled the company to make substantial improvements to production yields on its land.
Its first harvest in Sierra Leone, on a 3,000-acre plot, was boosted by the novel idea of spreading crushed seashells on the land, reducing the soil's acidity, a problem that has long dogged the area.
Work begins at last on Range Resources' oil punt in Somalia
Still in Africa, Alternative Investment Market-listed Range Resources has finally begun work on its prospects in Puntland, the semi-autonomous region of Somalia, where it is one of several partners in the first oil drilling in the country for more than two decades.
Range has a 20 per cent share in two production agreements in the country and hopes to have completed drilling and evaluation work on this first well within three months or so.
The initial estimates are that the resource could be as large as 300 million barrels of oil, one reason why Range has for five years stuck with a project repeatedly threatened by political instability in the region.
Range has assets in less difficult geographies, notably Texas in the US, but its shares have struggled to make much headway, most recently because of a sizeable discounted share placing. Broker Fox Davies Capital has a 27p target for the stock – which closed below 12p on Friday – while Old Park Lane sets a target of 32p.