Banks commit to support small businesses

Statement of Principles — Banks and Businesses Working Together

The British Bankers’ Association (BBA) has revised its guidelines on bank lending to help small firms access the funds they need to survive the recession.

Statement of Principles — Banks and Businesses Working Together

The rewritten Statement of Principles sets out guidelines which must be implemented by all UK banks that comply with the Business Banking Code.

The guidelines for the banks include contacting firms they believe are in trouble, offering to discuss all concerns in person, using their business assets to secure debt before considering personal assets, and helping customers to revise their business plans and forecasts. Stephen Alambritis, Federation of Small Businesses (FSB) head of parliamentary affairs said:

“Small firms should see the benefits of these guidelines in the new year. However, the evidence that we have had from businesses is that banks are currently still reluctant to lend.”

“The Statement of Principles needs to be highlighted to branch managers — it is important that they are aware that their chief executives have signed up to this code, so that they put it into practice,” he added.

The guidelines were revised following pressure from the Government for the banks to help firms that are facing financial difficulty. BBA chief executive Angela Knight said:

“The Principles show that banks are committed to working with business customers to find ways of overcoming the difficulties they may face. They also emphasise that if the owners and managers of the business take early advice and action, they can work with the bank to sort out difficulties.”

In addition, several high–street banks have announced plans to help small businesses, through a range of funding and support packages.

The Royal Bank of Scotland has promised that overdraft facilities for small business customers will remain in place for the next year, with no increase in overdraft costs until at least the end of 2009.

Barclays has stated that it will make an additional £1.5 billion available to its small business customers during 2009. It also pledged not to alter the limit or rate of business overdrafts, providing the borrowers do not have a significant change in circumstances. Meanwhile, HSBC has introduced a £1 billion working capital fund to help small firms. HSBC UK managing director Paul Thurston said:

“It’s a tough business environment and we want to support our customers, whose continued growth will provide a stimulus to restore the UK economy”

For more information, visit the BBA website

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