Britain’s banks still want to lend to small businesses – but in today’s credit crunch climate many enterprises now lack the confidence to even apply for substantial loans, business leaders were told last week.
John Addison, head of small business at Barclays Bank in Birmingham, told delegates at an Accessing Finance seminar held at Aston Science Park: “As a bank we are currently sanctioning four out of every five business plans submitted to us.
“We are definitely open for business and we are a bank that likes to say ‘yes’ – but, like everyone else, we are running a business and on occasions we may say ‘no.’
But what surprises me at the moment is that since the launch earlier this month of the Government’s new Enterprise Finance Guarantee (EFG) scheme, which enables businesses with an annual turnover of up to £25 million to secure loans up to £1 million, we have only received six applications, four of which have been approved.
“Normally, I would expect to be receiving at least six applications every day – but perhaps this reflects a lack of confidence among customers who believe that banks generally are now not open for business.
“It could be that some people just do not know about it.
“Or, as the scheme was only announced on January 14, maybe they are not yet fully aware of the proposals,” he added.
“Understandably, there is a lot of negativity at the moment and we know that people are not approaching the banks for help simply because they think that the banks will say ‘no.’
However, as the EFG scheme is new, we are taking steps to ensure that our staff understand it, so that they, in turn, can make customers aware.”
Mr Addison, who also urged SMEs to produce focused, robust, business plans when seeking financial assistance, made his comments at a seminar co-hosted by the Fair Finance Consortium (FFC) and the West Midlands Minority Ethnic Business Forum to highlight alternative sources of finance which are available to businesses as distinct to lending from traditional High Street banks.
Ex-banker Dr Steve Walker, chief executive of Aston Reinvestment Trust, a member of FFC, said: “CDFI lending in the West Midlands has trebled in the last quarter of 2008 “