Here is that headline again, banks still not lending to SMEs

The latest nationwide survey by the Federation of Small Businesses has established that in the past year banks are still not lending to those businesses that need to expand and grow. Companies are missing out on opportunities to progress.

Judi Brazkiewicz, Chairman for FSB Worcestershire, said if the Government required the private sector to pick up the slack created by cutbacks to the public sector, the banks have to begin lending once more.

The survey has found that 20% of members that have made contact with the banks and asked for credit, 33% of those were turned down and this is comparable to over 300,000 businesses not receiving the credit they need. 16% of the 33% turned down were given no explanation while just over 25% were refused because of inadequate security.

Others determined  the bank terms were too severe and decided to use their own cash as an alternative. Being refused has led to small firms experiencing ongoing financial concerns and one in five has postponed investment plans. Businesses request loans for a variety of reasons. There is a  need to purchase more equipment and machinery, additional finance to cover cash flow and to expand their company.

The Bank Managers are no longer acquainted with their customers and decisions are made centrally in accordance with predetermined criteria’s. After meeting with bank officials who declare they are very much open for business, the FSB say after referring business owners to the bank, they are turned down.