Banks Aren’t Lending – So What Do You Do?

There are an increasing number of stories in the press about the lack of funds being made available for small businesses.

So what is a small business to do if funds are required to help with growth plans or support cash flow?

Well, in the current climate there are a number of innovative cschemes coming to the market that could well provide alternative sources of funding for small businesses. Recently there have been £500k interest free loans and invoice funding from 0.9-2%; all of which are viable options for small businesses.

If you’re unsure of the different sources of funding that are available, you may find the following article of interest: Different Types Of Funding

Small business lending to become an even bigger problem?

Banks have threatened to raise the cost of borrowing for small businesses. Given the number of complaints we hear that it’s too expensive already, that’s less than ideal.

What do you do when your customers complain that the cost of your product is too high? Presumably, the answer isn’t ‘raise prices even more’. But according to a report by the Bank of England, UK banks are planning to do exactly that, raising the cost of borrowing for small businesses over the next three months or so, despite the fact that SMEs have spent the last few years vociferously complaining that they can’t afford to borrow in the first place. Time for the Government to start cracking the whip a bit harder?

Read full article: http://www.managementtoday.co.uk/news/1078121/small-business-lending-become-even-bigger-problem/

Santander small business lending boosts profits

Santander saw an 11 per cent increase in UK profits in 2010, up from £1.5bn in 2009 to £1.7bn. Lending to small and med- ium-sized businesses rose by 26 per cent from £6.7bn to £8.5bn and retail deposits were up by 22 per cent from £5.6bn to £6.8bn.

Santander UK chief executive Ana Botín says: “We are working towards completing the acquisition of 318 RBS branches, a key step in fulfilling our ambition to be a full-service commercial bank. Our aim is to increase our lending to UK businesses and create new jobs as we open more business centres to serve them.”

Source: http://www.moneymarketing.co.uk

Bank lending targets set to disappoint ministers

Britain’s biggest banks are set to increase the amount of money they lend to small businesses – but not by as much as the government had hoped.

The Coalition has been locked in a series of secret discussions with the country’s leading banks under the codename ‘Project Merlin’ for several weeks, and the talks are set to conclude imminently.

During the talks – which have involved HSBC, Barclays, Royal Bank of Scotland and Lloyds – the Government has pushed for the creation of a small business lending target, which will oblige Britain’s financial houses to furnish a specific sum for the country’s emerging firms.

It is believed the banks have agreed to lend up between £150m and £180m to small firms this year; this is a significant increase on the amount loaned in 2010, but far less than the £200 million the Treasury was hoping for.

Ministers had hoped that, by increasing the availability of funds for new and emerging enterprise, they would encourage a burgeoning economy built on entrepreneurial spirit – a vision which prime minister David Cameron has often discussed.

Read more: http://www.growingbusiness.co.uk/bank-lending-targets-set-to-disappoint-ministers.html

eBay report names and shames banks

Despite assurances to the contrary, many of Britain’s high street banks still aren’t lending to SMEs – at least that’s one of the findings of eBay’s latest report.

The Online Business Index, eBay’s regular barometer of online firms, has investigated the relationship between banks and businesses, finding that one in three SMEs are still unable to access new finance from their banks.

The results are dire: all of the big four banks score poorly, with Santander the only bank to emerge with its reputation relatively intact on the issue of lending. In fact, the number of Santander customers claiming they are unable to access new finance stands at half the level of RBS.

Read full report and rankings here: http://realbusiness.co.uk/finance_and_banking/ebay_report_names_and_shames_banks

Bank lending criteria ‘too restrictive’

A report by the Bank of England revealed that net bank lending fell by more than £50bn in the past year, which has had the greatest impact on small firms. The Institute of Chartered Accountants in England and Wales (ICAEW) says the banks’ lending criteria is too restrictive for those companies.

Blue Tree Services, a small technology company that sells and manufactures tracking devices, has struggled to secure funding.

Co-director, Mike Smuts, said he believed that if they could secure a loan, the business could increase its turnover tenfold and create 50 new jobs. However, the firm has unsuccessfully applied for a loan of less than £50,000 with HSBC, NatWest and Lloyds TSB. They later applied for a reduced £20,000 loan but the assets required to secure the loan were unreasonable.

Read full article: http://www.growingbusiness.co.uk/restrictive-bank-lending-prevents-business-growth.html

Lending to Small Businesses Down 28 Billion Since 2008

Business lending has fallen by £28 billion since the start of the global economic downturn, a new report has indicated.

Bank of England figures reveal that lending has declined sharply since the collapse of Lehman Brothers two years ago, and companies now owe £471 billion to the banks, down from £503 billion in September 2008.

British bank Aldermore said the downturn in credit availability has hit small and medium-sized businesses (SMEs) particularly hard.

Its chief executive, Phillip Monks, commented: “SMEs are the engine of the British economy, but they can’t power on forever if their ability to make vital investments and to hire new staff is compromised. This is particularly worrying as the deficit tackling measures mean the private sector must take more of their strain.”

Source: http://www.smebusinessnews.co.uk/lending-to-small-businesses-down-28-billion-since-2008/804/

How to get a bank to give you money by Helen Loveless

The debate over lending to small businesses shows no sign of ending, with David Cameron a few weeks ago announcing he would ‘force’ the banks to lend.

The Prime Minister’s pledge came in the week that Royal Bank of Scotland, Lloyds TSB, HSBC and Barclays all reported half-year results that showed a return to huge profits.

HSBC, the first to report, posted half-year profits of £7bn while Barclays’ gain was £3.9bn. Lloyds Banking Group reported profits of £1.6bn while RBS made £1.14bn. Lloyds and RBS are part-owned by the taxpayer.

Read full article: http://www.thisismoney.co.uk/work/article.html?in_article_id=511504&in_page_id=53928