Filed under: Small business — Alan @ 1:45 am
The Bank of England released its most recent report on credit conditions, revealing some interesting, but not surprising, things. The bank reports that small business demand for loans has dropped, while high street banks continue to keep charges where they have been or higher. In fact, the findings state that lenders were raising fees on home loans to a point higher than any of their own cost increases would demand.
While the credit call from small business fell, the banks did nothing to lower their rates in any attempt to gain new business. Among the banks that increased their number of loans to small business, most said that they were doing it as part of a strategy to garner more of the market share.
Some wonder if this could be a signal that at least some banks are once again willing to compete for the small business market. This thought was deflated when the report went on to say that the lion’s share of lending institutions do not intend to increase lines of credit to medium or small sized businesses.
The reported stated that requests for credit cards for small business had increased and that less small business defaults were on the record for the third quarter. Some lenders speculated that the latter was because of better capital management and increased profitability in the small business sector.
Filed under: Business Finance — Alan @ 10:30 pm
There is a financial debate ongoing about the country’s lending practices. The lending rate to businesses continues to fall, but by a smaller rate than before. This indicates that either British businesses do not want to borrow money or that banks are not willing or able to provide it.
The Bank of England would have us believe the latter, rather than the former is true. It reports that its agents say that a weak demand is part of the problem and that the demand for credit is subdued.
A spokesman for the Federation of Small Businesses, from Scotland, says that any lower demand is reflective of business owners using alternative sources of credit and not a lack of need for financing. He proposes that the credit crunch and recession placed many businesses in a position of utilising alternative credit sources and they continue this procedure because of a lack of ability to get funds from banks or a distrust of their banks.
The lending trend to larger businesses seems to be better and this concerns some because it seems proof of the banks unwillingness to lend to small business. This, of course, troubles policymakers who have been holding interest rates at a record low and pumping billions into the economy to help revive subdued lending.
While the banks talk about a weak demand, what we might be seeing instead is a weak response to small businesses that need cash flow.
Experts remain concerned that restrictive lending conditions are blocking possible economic increase.
Filed under: Business Finance — Alan @ 2:56 am
When Britain’s economy recovers, it will likely be thanks to the capability of company boards. These boards will need to offer strong direction within the commercial sector for those with enterprising talent. This is according to Dr Neville Bain, the Chairman of the Institute of Directors.
This statement comes after recent comments made by the Bank of England which warned that the economy’s recovery will likely be slowing down. Bain, and many other experts, have suggested that strong leadership from businesses in the U.K. will be the key to a speedy and sustainable recovery.
The IoD has released new guidelines in The Effective Board which take into account some of the things that have been learned throughout the recession. Rather than focusing on legislation and regulation, the guidance focuses on how successful boards can help with the economic recovery. Bain has stated that a board must “do better” no matter how well it is currently doing. He has also stated that smart risk-taking is extremely important, with the best boards neither “risk-averse” nor “reckless” when making decisions.
The Effective Board details some of the characteristics of the best and most successful boards. Having good people, a good strategy, and the right skills is essential when forming a good board. Both values and leadership are also important, with “good governance” being one of the biggest ways to have a successful board.
Bain has also said that “balance”, “annual meetings”, and an efficient system that takes into account “risk management” are three things that will help build boards that can help the economy.
