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26 Feb 2009
Business secretary Peter Mandelson has launched a broadside against the banks for their treatment of small business, as complaints continue that the government’s own strategy to stimulate lending is not working.
Speaking on the BBC’s Panorama on Monday, Mandelson said: ‘Banks are not sustaining or maintaining the lending that they could and should do in their own self interest and, as a result, they’re leaving a number of companies high and dry.’
Sympathising with the position of small business, he added: ‘They are confronted by new lending decisions being taken and summary judgements, and either withdrawing facilities or renewing them on more expensive terms without any proper discussion. That behaviour is frankly unacceptable.’
The government’s Enterprise Finance Scheme, launched to free up £1.3bn in lending to small business, has faced criticism from accountants who claim banks new nothing of the scheme and were unprepared to implement it. Accountancy Age highlighted the problems at the end of January.
This week the Tories reiterated their own criticism. Mark Prisk, shadow minister for small business, said: ‘Our problem with this is that it is too narrow in its scope and it has been very slow in its delivery. Given the scale of the challenge, it’s just inadequate.’
Kevin Dickens, chairman of the UK200 Group, said: ‘My enquiries of around 100 UK firms indicate generally a lack of information and preparedness by all the banks to make use of the EFGS funding.’
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Briefings
By looking at the reasons supplier statements became unfashionable, and the reasons why it is different today, this paper delves into the many benefits that can be obtained by automating the process.
Having a real and true view of your organisation’s current financial position, and having the right systems and processes in place, will ensure that you can make strong choices and are ready to capitalise on opportunities
AccountancyAgeInsight is a frequently updated resource centre for finance professionals, offering a free and easy-to-use digital library of briefings, white papers and other information resources. 
Visitor comments Add your comment
Banks unsupportive of SME,s ? no change then,
As an qualified accountant who spent most of my time in the last recession temping at FC level for a number of SME's all I can say is that banks have never been particularly supportive of SME's when times are tight. I recall the extortionate charges we had to pay so that an independent ?assessment could be made of our creditworthiness by the banks own investigators This resulted in no relaxation in our hand to mouth status, despite the company being quite profitable, Fledgling companies often find themselves out running their capital base due to their pace of growth and unfortunately rely on the Banks to provide support until more permanent funding is in place
Posted by: Steve Boothman, 26 Feb 2009 | 00:00
Barclays Bank Do Not Care About SMEs
I am an FCCA and know of a long established SME which has banked with Barclays since its formation in the 1950s. It has current borrowings of around £35,000 and has been trying to get an additional overdraft facility of just £15,000 to weather the economic storm. The bank has an unencumbered first legal charge over property worth more than £100k but they have said 'no' twice. It takes ages to get a response, and everyone there seems frightened and quite incapable of making a realistic and sensible decision! The government is useless - all talk and no action - SMEs need help now before it is too late! It is all just so exasperating.
Posted by: Ken Stones, 28 Feb 2009 | 00:00