Byline: JOHN HILL
AT SOME point in the life of a business, there's a moment when an entrepreneur has an important conversation with a bank about money.
Sometimes a business goes away happy, and sometimes they don't. But how can we all make sure the conversation is fair, frank and doesn't leave a bad taste in the mouth? "At its core, the financial crisis was a crisis of trust - between market participants, but just as importantly between banks and their customers," said financial secretary to the Treasury Mark Hoban.
"It's only through co-operation and engagement between banks and business, through campaigns like the Better Business Finance Initiative, that we ensure we are all pulling in the same direction."
As part of this Better Business Finance Initiative, Hoban joined British Bankers' Association chief executive Angela Knight and CBI SME Council chair Lucy Armstrong at the Gateshead Hilton, as part of an event organised by the British Chambers of Commerce and the BBA, to explain the bank services available to small businesses. The event - which included a panel of leading banking figures from Barclays, HSBC, Lloyds, Santander and Royal Bank of Scotland - was the sixth of a 15-date national roadshow highlighting measures such as the pounds 2.5bn New Business Growth Fund backed by the five big banks, as well as a pounds 190bn lending deal that has pounds 76m earmarked for small businesses.
Speaking to the Journal, chief executive of the BBA Angela Knight said: "Some of this is a restatement, some is new. We're restating the importance of interacting with customers, but being able to appeal if you've been turned down is new.
"Realising there's an equity gap for larger businesses has been flagged up for years, but putting the Business Growth Fund in that gap is new. We're looking back to the bank manager being the trusted individual, but with a mixture of meetings and emails as opposed to just face to face."
On top of providing commitments to provide finance as part of February's Project Merlin deal, a Mentors Me scheme has also been announced this month in which 250 current and former high-street bank staff will offer their services to mentor business. Up to 1,000 mentors will be accredited and made available in the first year of the scheme.
Knight said that "being able to turn around to someone else and ask what you should do and how you should do it is probably one of the best things you can do".
However, she said the "single biggest thing" businesses must do is to put a solid business plan in place.
She said: "It's not just about a good idea. Business plans need to have some proper substance to them."
HSBC's head of strategy implementation, Andy Grisdale, has noted a "degree of caution" among businesses, resulting in restrained use of overdraft facilities and stockpiling of cash.
He said: "As you move through the portfolio, you can see the trade component has moved up year on year and the export component is up even more.
"However, there is a certain fragility of confidence. Businesses are exercising a degree of caution. They're sweating assets and stockpiling cash but debt servicing costs are massively down. We've seen overdraft utilisation at an all-time low, with business on average not using almost 60% of their overdraft facility.
"This could mean businesses will be in better shape when they do decide to grow, but there is a collective responsibility to join up better, to communicate and educate more. For the guys on the front line, it's about trusted advisor status. It's not just about saying yes or no to funding."
Barclays commercial director James Cliffe said the products the bank offered had not changed markedly since the downturn, but that it was focusing on training more skilled managers to work more effectively with businesses on a local level. …