Ex Banker blasts banks for failing to lend to small businesses

Banks Criticised for failing to lend money to Small Business Startups

Despite all the claims by the banks and the governments, many people trying to start up a business are finding the banks are giving their applications short shrift.

Bill Christie – a commercial financier with over 25 years experience in the banking sector – states that he is seeing a continual increase in the numbers of small business lending applications rejected by the banks “pursue a policy of extreme risk aversion” which means that the banks have “effectively stopped lending to certain types of business”.

“I think it’s very tough for small firms out there,” said Mr Christie, who warned that those firms reporting problems may only represent the tip of the iceberg.  “It’s bigger than we realise.” Mr Christie has worked with a range of people who have had applications for funding rejected on apparently debatable grounds. Others have been shocked by the price that they were expected to pay for any support.

Alistair Patterson, Director of Kids Bee Happy, a low cost franchise in the Childrens entertainment sector said that potential franchisees were indeed experiencing difficulties getting the banks to lend.  “Our franchise is a very low cost franchise” he said “and the purchase price includes everything that franchisees need to get trading, so they don’t need to have a large fund of working capital behind them.  However, people are saying to me that they can’t believe the hoops that the banks are making them jump through for such a small amount of money.  One applicant has been waiting for over two months to hear from their bank, if it was for a loan of £300,000 then I might understand it, but the amount in question is only £3,000.”

In order to help franchisees get through the banks vetting Bill Christie is now helping Kids Bee Happy franchisees with the finance applications.

 

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2 thoughts on “Ex Banker blasts banks for failing to lend to small businesses

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  1. I can totally sympathise with this. My husband has his own business, which has been quite badly hit by the recession. He asked the bank for a small overdraft facility to help with cash flow … just a couple of thousand in case things get sticky. He’s had to have meeting after meeting, fill in endless forms and still hasn’t received a reply after two months. By the time they’ve made their minds up the recession will be over … or we’ll have gone bust!

  2. Thanks for your comment Lizzy. We hear the same story over and over, the government and the banks continually talking about how much they’re lending to businesses, but from what we see and hear, they’re only willing to lend to profitable large businesses, in certain cherry picked sectors, who’ve got good cashflows – ie – those that don’t need it!

    I had a bizarre conversation with a funding agency last week who told me that they could provide help to fill in a complex application form, I asked if they charged for that, they said “Yes, but we have a grant that can help with that”.

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