Business lending still too steep
Sep 14 2009
Banks are still turning the screw on small businesses
Banks are imposing extra charges, increasing interest rates and demanding personal guarantees for lending to small businesses – and the government’s Enterprise Finance Guarantee (EFG) scheme has done little to help.
A survey of small businesses from lobbying group the Forum of Private Business (FPB) finds that there is still a ‘significant cost barrier’ in the way of funding, according to FPB spokesman Phil McCabe.
Cost of finance is an issue for three in five respondents, while for one in five, it has become a ‘very serious’ concern.
Says McCabe, ‘The tragedy is that, as a result of this, often these small firms are not able to satisfy orders and exploit other opportunities that exist. Many then have no alternative but to close their doors.’
Stuart Hamilton, owner of Berkshire-based tool supplier and sharpener Hamilton Beverstock, says his bank costs have increased 80 per cent since the end of last year, despite his being eligible for the EFG.
Says Hamilton, ‘We approached the bank for extra funding [at the beginning of the year] and were told the only way was under the EFG. We already had a £50,000 overdraft but they wanted to lump it together with a loan and charge us 2 per cent from nowhere, basically for a facility worth the same amount as we already had.’
McCabe adds that the overall availability of lending is beginning to ‘improve slowly’.
There are currently no comments on this article
Comments