Small business owners hit back at banks' reluctance to lend
by WIN Admin — published in Press Releases
Small business owners have reiterated that it is the banks' reluctance to lend, rather than weak demand, which is stifling the flow of finance to small firms.
Business owner-managers claim that banks are asking for increased personal security, are offering businesses more expensive overdraft facilities and are making inconsistent lending decisions.
Gavin Wheedler, CEO of translation agency Applied Language Solutions, told BAD News that he was expected to put up security when he approached a bank for a loan: "We approached the banks and our experience was pretty poor. Unless you have big assets that they can take as security, then their answer is 'no'. What's happened is they've gone from one extreme to another, instead of being in a sensible middle area."
Meanwhile, members of the Daily Telegraph's business club have also reported a range of negative experiences with the banks. One start up owner said he asked the bank for an overdraft and was offered an unsecured facility at "11.23% above the base rate".
Other business owners accused banks of operating with a 'tick box mentality', and being too reliant on computer scores rather than understanding and assessing a small business.
Lending to small businesses through the Enterprise Finance Guarantee (EFG) scheme has also dropped, according to the latest Government figures. Statistics from the Department for Business, Innovation and Skills (BIS) show that lending under the scheme dropped from £254 million in the first quarter of 2009 to £186 million in the first quarter of 2010. Lending fell further between the first and second quarters of 2010, down from £186 million to £149 million.
Source: BAD News