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"The Government is on the record as saying, following the very public bail-out for many of your members, that lending would return to 2007 levels and at realistic rates. This is clearly not the case," said the FPB's Chief Executive, Phil Orford in a letter to his counterpart at the BBA, Angela Knight.
"As you are aware, real interest rates on overdrafts, in particular, are as high as 15%, lending facilities are being reduced or withdrawn and charges for renegotiated agreements are excessive," Mr Orford continued. "We believe this will make survival extremely difficult for many small businesses and consider it to be an unacceptable position given the clear public obligation the banks have, to deliver something tangible to personal and business borrowers."
Speaking in the House of Commons today (Wednesday, 22 October), Ian Pearson, the Minister of State and Treasury Economic Secretary, expected other banks to follow the Royal Bank of Scotland (RBS), the Halifax Bank of Scotland (HBOS) and Lloyds TSB, which he said had committed to "maintain the availability and active marketing of competitively priced lending to SMEs at a level at least equivalent to that of 2007".
Mr Pearson said that the Chancellor of the Exchequer, Alistair Darling and new Secretary of State for Business, Enterprise and Regulatory Reform, Peter Mandelson, would meet with the re-capitalised banks and building societies to "discuss these issues and what small businesses can expect from them".
The statement follows a meeting of the Commons Business Select Committee in which Lord Mandelson told MPs that the banks had a responsibility to lend to small businesses at 2007 levels.
Recently, the FPB revealed that more of its members are experiencing greater difficulties accessing finance from their banks, in addition to having loan and overdraft rates increased. Mr Orford reported this to Lord Mandelson and the Parliamentary Under Secretary of State for Business, Enterprise and Regulatory Reform, Baroness Shriti Vadera, at a meeting of the Government's Small Business Forum on Thursday, 16 October.
"If anything could come from these meetings, I would like to see the banks being more flexible and more understanding when it comes to considering withdrawing or reducing overdraft facilities," said FPB member Mark Esslemont of Esslemonts, a clothing and accessories shop in Aberdeen. "Every company, be it a sole-trader or a multi-national, needs access to finance in order to survive. I hope these meetings over the coming days produce something that is useful to small businesses."
Another member of the FPB, Stig Andersen, of Stonehenge Ales, Salisbury, has experienced a range of issues with banks.
"I find it appalling that I am charged to set up an account or do anything these days. Cheques and online banking are another problem. It seems to take days for anything to get paid in," he said. "I am a small business owner and having that money paid into my account instantly or as soon as possible would be a major help, especially in the current economic downturn.
He added: "What would really help right now is having regular access to my bank manager, and in my case with one of my banks it would be nice to know the name of my business banking manager."
The FPB has produced a guide to surviving the credit crunch. Small businesses can find information on alternative sources of funding, such as asset-based finance and invoice financing, as well as advice on credit management. It is available from the FPB by calling 0845 130 1722. In addition, ‘health checks' that the Government has promised will be provided by Business Links across the UK.
"We will continue to be as vocal as possible in our condemnation of the continued abuse by some of the retail banks. The banking sector, and the BBA as their representative body, seem to missing a great opportunity to deliver a huge amount of goodwill at little risk to performance," added Mr Orford. |
