Banks continue to fail small businesses
Mar 06 2009
Banks are offering little support for SMEs
Banks are popular with few at the moment, least of all SMEs.
In a poll conducted by SmallBusiness.co.uk, over 80 per cent of respondents reported that their banks have failed to offer support.
Some 48 per cent said their bank had no understanding at all, with 28 per cent saying they had been supportive verbally but not in action, and ten per cent reporting that their overdrafts had been cancelled.
Jim Hunter, owner of Greengait cleaning services, was turned down for much-needed funding under the Enterprise Finance Guarantee scheme.
He says: ‘At the moment we’re on track to double our earnings from last year. The problem is that we have construction contracts where the terms of payment are 60 to 90 days, so I still have wages to pay in between.
‘I explained all that to the bank, but they just didn’t want to know. I really need help. I’ve ploughed every penny I have into the business and my house is also on the line. At the moment there’s a danger we could fold – which is really frustrating because it is a good business.’
Paul Busby, owner of car mechanics Paramount Performance Tuning, had problems with his bank when looking for a temporary overdraft.
He says: ‘I was very surprised when they turned us down. I didn’t think we’d have a problem as the company brings in £750,000 each year and has no debt.
‘Eventually they agreed, but it took much longer than it should have. It’s not always loans that people need, but flexibility in terms of overdrafts and interest charges. That’s what will help us out of the recession.’
Of the 298 small businesses polled, only seven per cent said their bank had been more supportive than expected, with just four per cent saying they had been very constructive and helpful.
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