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Lending service could help smaller firms. Pearson May News Update - Wednesday 21 October
Lending service could help smaller firms
The banks have been urged to engage with a special intermediary lending service aimed at securing the flow of credit to viable small businesses.
The Forum of Private Business (FPB) has said that the service, which can be accessed through Business Link, will provide support for those businesses that are facing difficulties getting funding.
The business group wants the banks to play a full part in the scheme.
According to the FPB’s recent Economic Downturn Panel survey, two thirds of firms that responded said they would welcome more localised support from their banks.
But six out of ten also said that they wanted bank managers to show a better understanding of small business needs.
The FPB believes that large numbers of small businesses are reluctant to explore lending support schemes delivered by their banks because they are worried that any enquiries may see them classed as high-risk.
Almost a third of firms in the poll expressed a concern that applying for the government’s Enterprise Finance Guarantee scheme would create an adverse impression with their banks.
A fifth feared that borrowing would, in fact, be restricted as a result of their applications.
Nick Palin, the FPB’s director of finance, said: “The lack of availability of credit remains a concern and the cost of finance is still high. Many small firms are being rejected simply because of their size or industry sector.
“The Business Link financial intermediary service is a welcome step towards helping banks re-engage with their small business customers.”
But Mr Palin added that the banks need “to get behind this initiative publicly, so that owners of viable yet struggling businesses are encouraged to explore the help that is available”.
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