Latest Article: Small Businesses & Bank Lending culture crash
Posted by: Imber on Sep 1, 2014
The Association of Independent Professionals & the Self-Employment (Formely PCG) said that there must be a revamp towards the smallest businesses in relation to the banking culture.
IPSE’s chief executive Chris Bryce was responding to a study that found more than 33% of small traders seeking business loans were both turned down by banks and then unable to find the needed funds from elsewhere.
“If we want these individuals to become the successful businesses of tomorrow, the banking culture must change,” said Mr Bryce
“For many self-employed people, a small loan will allow them to move their home business into a more professional workspace, or to invest in a marketing campaign to find more clients.”
Other relevant figures were also found in the survey for the Forum of Private Business. It said that approximately a 10% of the traders say that due unwillingness of the bank to lend; access to finance will be a “major obstacle” to meeting their goals & plans for the following years.
It is also important to understand that a important portion of companies are therefore resorting to use their own profits to fund their growth plans - a contingency option “which may impact on the pace of recovery,” warned the FPB’s Phil Orford.
Correspondently to this, the Bank of England has released its latest figures for Funding for Lending. They show that lending via the scheme to SMEs fell between April and June. It also fell in the previous quarter.
“Lending to businesses through the scheme was still negative in the last quarter,” reflected Paul Aitken of personal asset lender Borro. “Even if a bank were to grant a loan, these businesses would still have to wait a considerable period before the cash enters their accounts.”
“These figures would surely be worse still if Funding for Lending was not in place,”
“Without more lending to small businesses their growth and the country’s growth will remain slow. Politicians of all parties need to have a hard look at the lending sector ahead of their conferences in September and October.”