Newspaper article The Evening Standard (London, England)

Hand over the Money! Banks Are Still Starving Us, Say Small Firms

Newspaper article The Evening Standard (London, England)

Hand over the Money! Banks Are Still Starving Us, Say Small Firms

Article excerpt


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 [pounds sterling]20 billion state bailout, was the "worst" according to respondents. Barclays was the second

THE GOOD,THE BAD AND THE UGLY Running a business? Which banks are the heroes and which are the villains? Tell us at 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 [pounds sterling]9,500 to [pounds sterling]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. …

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