Banks are STILL bottling it!

I'm not a great fan of The Mail (more a Times person) but there's an interesting article here.

As an Insolvency Practitioner, part of my role is to help people (individuals as well as businesses/companies) deal with financial problems. Sometimes that "help" is as simple as restructuring their cash flow with the aid of a small loan. However, this isn't always as simple as it sounds. Small businesses are vital to UK plc's economic health and a small loan can often be the tonic that's needed to get them through a bad patch.

The banks however seem to have ignored this point. I regularly advise small businesses and whilst I can assure them that funds are available out there from the banks (they are, honestly!!), the hurdles that need to be cleared have simply got higher and higher over the last two years. Most notably is the almost universal requirement for a personal guarantee from the directors supported by a charge over their personal property. I would never recommend this, but often there is little choice for the directors if they are desperate for the funds...

The banks also insist on a ridiculous level of security where this is available. One instance I came across a few months ago was that the bank would lend £100,000 to a small business (turnover around £3.5 million) but insisted on a 400% security coverage against the company's freehold trading premises which was owned by the directors. I have absolutely no objection to a bank securing its lending (perfect business practice in a difficult economic climate) but 400% is way too excessive.

Without help through the difficult economic conditions, small businesses WILL fail. Yes it's more business for me as an Insolvency Practitioner, but I would much rather be in a position to help a business to recover than be the last resort to give it a decent burial.

Come on banks, get off your backside and make some sensible (and vital) lending decisions.