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20/10/2011
Bank Support For Small Firms 'Not Enough'
Research shows bank initiatives to boost small business lending have not gone far enough, says the Forum of Private Business
Just over a year after the launch of the British Bankers' Association's Business Finance Taskforce, new research suggests that it has not yet achieved its aim of repairing the relationship between banks and small businesses.
In all, 24% of small business owners on the Forum's cash flow and finance panel have called for more choice between 'traditional' banking services, while 21% want better access to alternative forms of funding.
In total, 26% of respondents said they were seeking out alternative financial products, with 21% of these interested in sourcing them from outside the main high street lenders and just 7% from mainstream banks.
"The Business Finance Taskforce produced 18 recommendations, some of which have been extremely useful – particularly in the areas of mentoring, lending appeals, finance readiness and funding for high-growth enterprises," said the Forum's Senior Policy Adviser Alex Jackman.
"But the verdict so far is that much more needs to be done to get cost-effective finance to the businesses that need it most.
"There is falling demand from small firms but that does not mean a lack of need for affordable funding. It reflects just how alienated entrepreneurs are by the restrictive risk criteria and steep costs being imposed by mainstream lenders. As a result, there are increasing signs business owners are looking elsewhere," he said.
He added: "Banks must act to boost their small business customers' confidence by improving regional infrastructures and restoring lending powers to local bank managers, who are in a far better position to judge risk than their centrally-based colleagues.
"We also need greater competition, both between high street banks and by allowing other, alternative funders to be able to truly compete in finance markets dominated by the banks. These measures would drive up levels of service and bring down costs."
(BMcC)
Just over a year after the launch of the British Bankers' Association's Business Finance Taskforce, new research suggests that it has not yet achieved its aim of repairing the relationship between banks and small businesses.
In all, 24% of small business owners on the Forum's cash flow and finance panel have called for more choice between 'traditional' banking services, while 21% want better access to alternative forms of funding.
In total, 26% of respondents said they were seeking out alternative financial products, with 21% of these interested in sourcing them from outside the main high street lenders and just 7% from mainstream banks.
"The Business Finance Taskforce produced 18 recommendations, some of which have been extremely useful – particularly in the areas of mentoring, lending appeals, finance readiness and funding for high-growth enterprises," said the Forum's Senior Policy Adviser Alex Jackman.
"But the verdict so far is that much more needs to be done to get cost-effective finance to the businesses that need it most.
"There is falling demand from small firms but that does not mean a lack of need for affordable funding. It reflects just how alienated entrepreneurs are by the restrictive risk criteria and steep costs being imposed by mainstream lenders. As a result, there are increasing signs business owners are looking elsewhere," he said.
He added: "Banks must act to boost their small business customers' confidence by improving regional infrastructures and restoring lending powers to local bank managers, who are in a far better position to judge risk than their centrally-based colleagues.
"We also need greater competition, both between high street banks and by allowing other, alternative funders to be able to truly compete in finance markets dominated by the banks. These measures would drive up levels of service and bring down costs."
(BMcC)
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