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Basingstoke businessman and FSB Hampshire and Isle of Wight chairman shares his views on banks lending to small businessess
SMALL business owners across the country continue to claim that they are not getting a fair deal from their banks - and the situation in north Hampshire is no different.
That is according to Tim Colman, who is Hampshire and Isle of Wight County chairman for the Federation of Small Businesses, and who runs Abacus HR at Worting House.
He said: “The biggest problem appears to be access to finance yet the banks claim to be lending more than ever to the very businesses that say they can't get funding.”
Tim said that in a recent survey by the FSB attracted around 11,000 responses nationwide, which showed that one of the biggest barriers to growth was that small businesses could not get finance to fund expansion or even to improve cash flow as they were fulfilling orders already in hand.
Of the responses from the FSB survey, 40 per cent of those who had applied for a loan or overdraft were turned down.
A further 40 per cent were offered funding that they simply could not accept.
Tim asked: “So with the banks painting a very rosy picture of their funding levels, who is telling the truth?
“Actually it appears that both the business owners and the bankers are telling the truth, but their definition of making finance available is very different.
“Peter Ibbetson, chairman of Small Business Banking at RBS recently shed light on this apparent misunderstanding.
“He explained that if a bank makes an offer of funding then it is generally accepted by the bank as providing finance.
“However the FSB survey suggests that over half the businesses getting such an offer are turning it down.
“Reasons for not taking up the offers of finance included very high interest rates, unrealistic arrangement fees, the level of personal guarantees required and even funding that was far less than their application and therefore of little or no help. The Bank of England has recently made £80 billion available to the high street banks to help private individuals get mortgages and small businesses to get access to finance, but if the barriers are the terms and conditions associated with such loans there is no evidence that this initiative will be of any help to struggling businesses.”