smallbusiness.co.uk: Helping your business think big

The key to business financing particularly from the Investment community is cash generation.Having worked for a few VCs , running businesses to make profit gets them interested but growing cash is a true sign of a successful business. This infers a crucial review of a business and its value proposition in the market. Also how it distinguishes itself to make better margins. Having spoken to one hard pressed local bank manager, he seemed more interested in selling me bank services and filling the HQ questionnaire than learning about my business. I would rather talk to a tough investor about funds

The government is naive in thinking that banks are not lending because they are making it difficult. The issue has to be tackled in two ways – the banks need more confidence to lend, sure but also the businesses need to be in better shape when they go to a bank for money. If you ask a bank to lend a business just working capital to see it through ‘a difficult time’ then the bank is not going to lend especially if the business owners are not putting anything at risk themselves – i.e. the dreaded security issue. However if the business went to the bank with a proper well thought through plan with investment requirement set out clearly and the impact it is likely to have on the business along with what they are prepared to put up as risk – then the banks are much more likely to lend. The question the government should be tackling is how we equip are SME’s with the necessary skills to be able to go to the banks with an attractive investment proposition but all we have heard from the current government is cuts to SME business support - we have yet to hear what they are going to do to ensure we encourage an enterprise economy where entrepreneurs are supported in launching and growing the businesses of the future. Rose Lewis, Pembridge Partners LLP

Given that banks were chastised for lending irresponsibly, it's probably unwise to criticise them for not taking risks with struggling companies. What doesn't quite add up is why the cost of loans is so significantly higher than the Bank of England's base rate, and why so many overdrafts are being reduced or axed with little or no explanation.

My bank has just announced their underling profit is up 11% to £264 milliion and they continue to support a football team for another £11 million a year.The figures do not supprise me as my company is struggling to stay in business so is paying them extra cash for loosing 20% of my equity through the banks greed and poor trading and no regulation enforced from the goverment. As it was imposible to change banks they took charge of my last asset while also refused to renew my loan unless I took out critcal illness insurance which amount to another few hundred more pounds a month which is clearly extortion. From £8thousand a month repayment we are now up to £20thousand as they try to rake their money back in as well as make more where they can which is very limited as only 4% of companies are making any investments into growth.
If I produced nuts and bolts that nobody wanted I could understand me closing down however I have been a front line social service from 15 years and the banks have done very well out of me and I have saved the public purse over the years thousands of pounds.
The goverment are not helping me to keep 50 people in work niether is the bank they owe no favours and do not care either way. It will cost the goverment more should the jobs be lost, however the bank will be safe as they will chase me for their loan.
The banks have had £20 billion pumped into to keep them afloat, companies have not, wealth comes from the ground and making things and trading in goods, unfortunatly companies have been encourage to venture overseas for vertualy everything and our manufacturing base has all but gone, I was dismayed the other day to see a tooth paste manufacturer disappear to the far east so we can't even make stuff to clean our teeth with. The city told us Britain was going to be the financial capital of the world, they certainly got that wrong. As the taxes from the financial world that had 27% of British business depleats, even more jobs in the public sector will disapear along with pensions and the like as they cannot afford to pay them.
From what I am hearing I am not on my own as many companies like mine are hanging on with their finger nails and are in deeper trouble than they first thought and the squeeze has not really started as yet. I clearly live in Disney Land and I will soon be joining and watching many more millions of moaners collect their unemployment payments. I dare say the shinning knights in armour will be called back to the castle early to fend off a another crisis as the peasents start revolting over the greed of the barons who were once called as they sold everything off the captains of industry. I think it might be a good time to start up a glazing company.

One of the issues is that local managers have no discretion. The banks need to start trusting their bank managers to lend money. We need a return to the bank manager as trusted advisor. http://stevegrice.wordpress.com/2010/07/19/how-to-get-banks-lending-again/

And yet banks insist they are supportive of small businesses. They maintain that they have the correct set up and structure to listen to each business’ specific needs and do their utmost to meet them. There appears to be an enormous gap between the official line endorsed by the marketing departments of the banks (based in head office) and the day-to-day experience of small business owners.