February 15, 2012
Filed under: Small Business News — Alan @ 10:22 am
In the past two years, the number of businesses that are taking out a loan, or a bank overdraft, has fallen.
This revelation has come out of a survey that was conducted by the Federation of Small Businesses.
It was recently shown that in the last year, bank lending shrunk in every quarter and many people see this as an embarrassing failure of the government’s Project Merlin.
The largest banks in the UK failed to meet targets that have been set about how much they should be lending to small businesses. The figure was missed by over £1 billion, however, the amount of money lent to businesses, big and small, did grow overall by just under £25 billion.
RBS was the main reason there was a shortfall in the amount of lending to small businesses. The other four major banks in the UK, Barclays, HSBC, Santander and Lloyds all managed to meet their targets. This is despite RBS being over 80 percent owned by the government.
Stephen Hester, the chief executive of RBS, has defended his bank saying that the amount of lending they did was similar to what all the other banks lent when combined. The banks previously agreed to increase lending to small companies to nearly £80 billion and also increase lending to all types of businesses up to £190 billion.
11,000 members of the FSB took part in the survey and it found that only around one in three used their overdraft facility last year. Around 10 percent took out a secured bank loan with even less than that taking out one that was insecure. This is a significant drop in the amount of lending that was taking place in 2009. A similar number of businesses, again around one in three, said that they used savings to fund their businesses.
The use of savings was especially true among companies that had recently started trading, with 70 percent saying they turned to this form of funding. Furthermore, nearly 35 percent of companies said they borrowed money from family or friends and only 25 percent use the bank overdraft.
The chairman of the FSB in the Wessex region is Ken Moon, and said, “The amount of money being lent overall is bigger than the target but it just goes to show that more money is being lent to bigger companies. We need more money to be given to smaller firms so they can take advantage of growth opportunities. Research has shown that credit is being refused to small companies and they are being forced to find other means of funding.”
The British Bankers Association commented that the large banks do have a commitment to lending to businesses which is shown by the figures. They also pointed out that information from the Bank of England has shown that the demand for credit from small companies actually fell during three out of the four quarters of last year. The government stated that they will not be repeating Project Merlin in 2012.
February 4, 2012
Filed under: Business Advice,Small Business News — Alan @ 4:43 pm
Small businesses in the UK are going to get a helping hand, or rather a pair of them, as Lloyd’s Banking Group and the SSE (School for Social Entrepreneurs) team up to provide financial, educational and practical support for new businesses that focus on the community.
The initiative is designed to promote the social entrepreneur, defined as someone who comes up with a viable commercial approach to a particular social problem or need. That might be in the voluntary sector, or ethical businesses, social enterprises or the government or public sectors; the idea is they will be helping to improve the quality of life whilst creating jobs in local communities.
The SSE was founded in 1997 by Michael Young, a social activist from Manchester who was also a co-founder of Open University, Which? And the Consumers Association. According to an evaluation by thinktank New Philanthropy Capital, and based on the results of previous SSE programmes, the new partnership has the potential to create 2,500 new jobs and £11m in local income and revenues.
Lloyds Banking Group Social Entrepreneurs programme is set to commence in April 2012, with the goal of helping around 500 new businesses to start up and get running successfully. This will be accomplished with a combination of bank financing in the form of grants from £4,000 to £25,000 and SSE’s innovative business courses.
Since 1997, the SSE has recorded a survival rate 20% higher for new businesses supported by its programmes than have been seen in traditional start-ups. SSE is geared towards entrepreneurs who are attempting to address issues within their own communities with the businesses they create, and that is the path to economic recovery. Alastair Wilson, CEO of the School for Social Entrepreneurs, says that “. . .growth . . . will come from people working locally”; and it seems to be working.
The commitment from Lloyds Banking Group will be a great asset to these young enterprises, and Paul Turner, Community and Sustainable Business director for Lloyds, said, “SSE’s track record made them a partner of choice and we are incredibly proud to be able to support them in this way.”
The NPC evaluation reported that businesses started up by SSE fellows, on average, hired two employees full time plus three part-time workers. Those operations, as a whole, are benefiting around 80,000 people in a range from young children to the elderly and those physically and/or otherwise disadvantaged.
Over the next five years, Lloyds Banking Group Social Entrepreneurs will be supporting businesses like the SOS Gangs Project started up by Junior Smart, a former criminal. His business is now an award-winning organisation that helps young offenders to get their lives back on track.
Another example is The Brink, founded by SSE participant Jacquie Johnston Lynch, who said that SSE offered a crucial boost to the enterprise. The Brink is a non-alcoholic bar in Liverpool that in turn offers help to people recovering from alcohol and drug addictions. This business, like hundreds of others, will positively affect the lives of a wide range of people in a variety of ways.
March 24, 2011
Filed under: FSB — Alan @ 3:02 pm
The Financial Services Board (FSB) deputy director of insurance, Jonathan Dixon, reported in Johannesburg, “Customers should be dealt with evenly and we need a protocol established to ensure it is carried out. There will be a shift in how banks interact and relate with their customers, which requires more direct regulating oversight.”
Customers’ base of security in their relationship with banks will be strengthened through the Treating Customers Fairly framework (TCF). This signifies a change in the culture. It is an endless struggle against companies that are constantly seeking to circumvent these measures, though.
“This is an ongoing struggle that we must push through until we achieve the standard of measures that gives customers back their confidence that we are protecting their rights in the relationship with financial institutions.”
Our initial launch into these new areas requires the FSB to shift from a passive to an active methodology. We must take the initiative before the problems compound. That is what the TCF is all about, but it also determines what our actions will be, rather than waiting for something else to happen first.
“Companies must see us enforcing the restrictions when they are tested. The institutions who flaunt fair treatment of their customers must be adequately punished to reduce the chance of repeating it.”
October 3, 2010
Filed under: General — Alan @ 12:41 pm
Newly elected Labour leader Ed Miliband is still a cause for concern among small business owners. His ties to the trade unions have always bothered them and his policies of advocacy for employees rather than employers is giving them a stir.
An FSB spokesman recently said that they hope Mr. Miliband will listen with equal attention to the opinions of the bosses and the opinions of the workers. In the past, he has supported policies that increase government intervention into business, decrease workers’ hours, and endorse more fairness to interns.
It is believed that he still leans this way because he retains his strong connections to trade unions.
The FSB also says that it has confidence that Mr. Miliband understands how important it is that bosses and workers get along and that he will be dedicated to working toward this end.
Ed Miliband narrowly beat his own brother in the leadership race, coming in first by about one per cent.
December 4, 2009
Filed under: Small business — Alan @ 5:17 am
RBS and NatWest are taking new measures to increase the support they are able to offer their million customers by introducing a new customer charter for SMEs.
The new charter will not only offer support to businesses, but also will help extend the initiatives that are available now to help customers grow their businesses as well as sustain them.
Chairman of the Small Business department Peter Ibbetson said that over the past year they have been hard at work listening to what customers want and are going through, so that they could develop initiatives that will make an impact and help guide customers through the recession.
The new charters are created to be aligned with customer needs and as part of a wider commitment they hope to increase their transparency and openness.
To fulfil these goals key industry bodies and customers will be consulted on within the charter and any issues that come up along the way will be immediately addressed. The progress of each of these commitments will be kept track of regularly.
Over the past twelve months RBS and NatWest have already implemented several new initiatives that have successfully helped businesses trade even in the midst of the recession’s fallout.
They also proved their commitment during the first few months of the credit crisis when they were the first companies to offer both a price promise and overdraft protection to abet the fears of businesses that their credit would be affected.
In the past two years, the number of businesses that are taking out a loan, or a bank overdraft, has fallen.
