Remember those ads back in the eighties and nineties when TSB said Yes! and The Midland – were the Listening bank!
Not so in the tenties. There is little help for SME’s that need money to grow.
Earlier in the week Osborne announced he would not allow banks to pay huge bonuses if they do not lend to small businesses.
“We will not allow money to flow unimpeded out of those banks into huge bonuses if that means money is not also flowing out in credit to the small businesses who did nothing to cause this crash and suffered the most in it,” Osborne said in a speech to the Conservative party’s annual conference.
According to a Sky News blog this week – Top UK banks are proposing to set up a growth capital fund in order to help boost small business lending,
Subject to formal approval from the banks’ boards and the Financial Services Authority, the venture is designed to provide growth equity for smaller British companies.
A taskforce set up in July by representatives of six major lenders will recommend setting up the fund into which each bank is likely to inject “tens of millions of pounds,” Kleinman says.
The proposals are due to be presented to Chancellor George Osborne and Business Secretary Vince Cable later this week, the British Bankers’ Association (BBA) said in an emailed statement on Monday, in response to Sky’s report.
For many, this is too little too late – business owners that are not being supported by their banks.
One business man, who’s company had been trading for over 30 years told me, “I have banked with this same bank for 20 years; they have done very well from me and my business. My business is struggling and I need a helping hand. I have explained our situation to my relationship manager and he said that he would see what he could do. Three weeks after that conversation the bank wrote to us to tell me that our overdraft facility would be cut from £75k to £15k. Now the business is in serious trouble and we have nowhere to turn.”
The Institute of Directors has conducted and published research which concludes that a third of businesses have been refused lending by their banks. The research sample of 900 small businesses found that 351 had applied to their bank for a loan in the first six months of 2010. These businesses have generally been seeking extra finance to support them through the tough economic climate of late.
However, it was not only those businesses that were turned down for loans that have complaints regarding their dealings with the banks. Those businesses that were lucky enough to secure finance complained to IOD that they had to wait extensive periods of time to receive the money. 40 per cent of those surveyed also pointed to the banks’ requests for extra security. There were some examples of people putting up their homes as security.
All in all – this is not good news for SME’s who need capital funding for stability and growth.
We are currently assisting a number of businesses who have been turned away by their banks. We are providing working capital, lease finance and vendor finance when the banks aren’t listening and saying No.