Real Business - The Champion of UK Enterprise

Banks leave SMEs in the lurch

By Charlie Lankston, published 223 days ago in Finance & Banking.

Victoria Pooley, managing director at The Data Partnership, told Real Business that when her business went to the bank for a small loan last year, they were only willing to lend her company the money if they became personal guarantors, a risk that her company were not willing to take. A year on, having quadrupled the business's turnover, her new bank manager was “only too happy to offer us an overdraft facility of ten per cent of our turnover”, a huge amount in comparison to their previous loan request. Pooley says banks prefer to risk the chance of their supposedly “valued” customers going out of business than lend them a relatively small amount of money to help them out of short-term difficulties.

Kim Farrell, corporate finance manager at CBHC chartered accountants, which specialises in corporate funding for SMEs, told Real Business that her firm has found ample funding for its clients: “We are in the process of securing millions of investments for small and medium-sized firms through government-backed schemes such as the Enterprise Finance Guarantee,” she says.

Reuters today reported that the BOE continues to state that some large businesses are accessing capital markets. Policymakers, however, are worried that credit still remains scarce for smaller businesses who cannot gain access to the stock and bond markets.

Related Articles;Banks block Darling's SME finance plansBarclays opens £150m SME fund