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Hand over the money! Banks are still starving us, say small firms
Lucy Tobin6 Apr 2009
HIGH street banks have failed to back thousands of London businesses in the recession despite receiving billions of pounds of taxpayer help, an Evening Standard survey has found.
Almost half (46 per cent) of the small and medium sized firms our report asked were refused emergency funding.
A third have also been hit by higher and often crippling lending charges, while one in five has been asked to pay back all or part of its loan.
Some businesses have gone under as a result, while others have been forced to look for other sources of capital.
The main reasons for loans being refused were: poor credit history (21 per cent), the "wrong" business sector (19 per cent) and no reply from the bank (17 per cent).
The government-controlled Royal Bank of Scotland, owner of NatWest and recipient of a £20billion state bailout, was the "worst" according to respondents. Barclays was the second most criticised bank. One respondent said RBS "forced a company into administration when cheques bounced on technical grounds".
Another claimed: "Unless you are prepared to put your house and all your assets on the line, and pay interest of 10 per cent to 12 per cent, RBS do not offer any help."
That echoed the complaints of television chef Antony Worrall Thompson, whose London restaurant business collapsed after Lloyds Banking Group refused to extend his overdraft unless he put his home up as a guarantee.
Barclays came in for criticism over high interest rates, with one business alleging the bank was "simply not lending on commercial terms". Another said the bank had "drastically cut" a credit limit "from £9,500 to £4,800, without notification".
William Flatau, whose First Finance brokerage helped conduct the survey, said: "The banks have taken countless billions of pounds of taxpayers' money, not to mention a lending guarantee from the Government, and it is hard to understand why they do not have the appetite to lend to the backbone of UK plc."
Dozens of respondents said banks had increased interest rates by up to 30 per cent in the past year. Those rises came at a time when the Bank of England lowered its interest rate from five per cent to an all-time low of 0.5 per cent.
However Lloyds, part-owned by the Government, and HSBC received praise from some respondents for being "proactive" and "supportive". The 168 responses to our poll, titled The Good, the Bad and the Ugly, came from industries ranging from fashion stores to financial advisers, gyms to PR firms.
Barclays said nine out of 10 of its small business customers were "satisfied". A spokesman said: "We have committed to making available to local businesses more lending than ever before."
A spokesman for NatWest said: "Our lending to SMEs (small and medium sized enterprises) is up 10 per cent compared with last year. This survey is a tiny snapshot and is simply not representative of the lending we do."
'I was not given overdraft help'
TANYA THOMAS
Richmond Rocks jewellers, Richmond.
Ms Thomas, 42, set up her store in October 2005. She was selling about £250,000 of jewellery a year until last November since when some months have been 50 per cent down.
She said: “I asked Barclays, who I've banked with for 15 years, for help but they're useless. I went overdrawn by a few hundred pounds. They charged me hundreds in fees, then turned down my application for a £2,000 overdraft.
“They let me increase an existing loan, but the interest rate would have doubled to 19.9 per cent from 9.9 per cent. I'm switching to Lloyds who offered a £3,000 overdraft at a much fairer 12 per cent.
“Luckily, I negotiated a £10,000 rent discount with our landlord.”
Barclays responded: “This business is a very high credit risk. We have increased lending to small and medium businesses by seven per cent over the last year.”
Reader views (5)
The government was real stupid to bailout the banks with billions of taxpayers money which all went to repairing the banks' balance sheet which improved the share prices to the benefit of shareholders while ordinary customers get repossessed and NO money for the economy. That's the simple answer. We the people are robbed once again after the banks gambled away our money. Any bank bosses charged or put on trial? Of course NOT.
- George, London, UK, 06/04/2009 21:52
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Banks are lending to SMEs, no doubt about it. However, if a business is in a vulnerable sector why should banks finance such a risk without any security? Mr Worrall Thompson was not prepared to put his house up as security, presumably in case his business failed. Clearly he had no faith in his own business in which case why should banks?
- Daniel, London, 06/04/2009 17:52
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Why not write a headline that says " Banks finally making sensible lending decisions using public money"? Oh, and Barclays has pointedly not received 'billions in public money'.
- Peter Bench, London, 06/04/2009 13:50
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Ms Thomas is selling knick knacks. No-one is going to be buying knick knacks for the foreseeable future because they are non-essential items. So the bank was quite right not to prop up her failing shop. If her business was as successful as she says it is she wouldn't need loans and overdrafts
- Freda Worboys, Richmond, UK, 06/04/2009 11:13
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Its the same in France, Bling Bling our President has bailed out all his friends with high positions in banks and now these won't lend back.
There is a way out: All small businesses should form an association or even a Trade Union and sue Gordon Brown directly: don't bother with those cretins called bank managers !
- Terry. B, Toulouse, France, 06/04/2009 11:11
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