John Rider: SMEs Not Getting Enough Financial Support
John Rider: SMEs in the West Midlands are missing out on financial support
“If the Government, together with the banks, does not get this sorted out then its hopes for a private sector-led recovery are in jeopardy,” he commented.
Mr Rider’s call for change comes after an IoD survey of 899 company directors across the UK, which show that one in three companies that had applied for finance in the first six months of the year was declined by its bank.
Although decline rates are dropping, research suggests that lending criteria has become more restrictive with higher security procedures.
However, some business bodies welcome more stringent criteria, claiming that the banks should be more responsible in their lending, particularly in the aftermath of the recession in which the UK economy is still highly vulnerable.
But according to Mr Rider, who was quoted on TheBusinessDesk as saying that some businesses have simply “given up on the banks”, the financial institutions have gone too far. He believes that globalisation is creating opportunities for small businesses, and banks must provide services to match their ambitions.
“Once a manufacturing firm might be able to borrow at say two and a quarter over base to finance expansion or new machinery,” he commented, adding: “Now, the banks are demanding an arm and a leg… and often a bit of your house too.”
Banking leaders reportedly rejected these claims, and say that lending in the West Midlands is increasing.