small business lending

Businesses Owners Still Reliant On Bank Of Mum And Dad As The Real Thing Turns Them Down

Businesses Owners Still Reliant On Bank Of Mum And Dad As The Real Thing Turns Them Down

25% of micro-businesses owners still rely on personal savings, family borrowings and credit card loans, to fund growth – according to a report Close Brothers. Banking on Growth: Closing the SME funding gap revealed a disparaging gap between the success rates of lager firms and micro-businesses (those with between one and nine employees) seeking finance from traditional lenders. While 38% of all small businesses have used bank loans to grow, this figure rises to 51% when enterprises with more than 100 workers are considered. Early-stage businesses and start-ups also struggle to gain the trust of banks in the beginning of their journeys, as 37% admit they’ve been refused credit in their first two years of trading. It’s suggested a failure for small businesses to secure funds could hamper lon... »

Businesses Owners Potentially Signing Their Lives Away, As Many Misunderstand Personal Guarantees

Businesses Owners Potentially Signing Their Lives Away, As Many Misunderstand Personal Guarantees

55% of business owners don’t know what a personal guarantee is, according to new research by Wirefund. The survey of 510 senior decision makers revealed that many misinterpret the clause, with 21% believing it only means that money should be paid back on time and to the best of one’s ability. Enterprise owners’ apparent ignorance could have consequences reaching beyond their business, as 61% of respondents don’t realise that personal assets are included as collateral. Just 8% are aware of how inescapable a personal guarantee is and that high-street banks always require them when offering finance. Despite the risk involved, business owners appear unfazed with 79% stating they had not been put off a loan because it included a personal guarantee. Amit Sankey, CEO of Wirefund said: “Personal g... »

Banks Won’t Deliver on “misguided” Small Business Lending Pledge

UK banks won’t deliver on their pledge to lend more to small firms, as the commitment is unenforceable, business groups have said. Under the Project Merlin agreement (PDF), UK banks have pledged to lend about £190 billion to businesses in 2011, including £76 billion to small firms (up from £66 billion last year). The banks have also committed to lend more should the demand arise. The Government has stated that if the banks don’t deliver on lending targets, bonuses to senior banking staff may be restricted. However, the Association of Chartered Certified Accountants (ACCA) said that the scheme cannot be enforced. “This project is completely misguided.” said ACCA senior policy advisor, Emmanouil Schizas. “Like previous projects, it will probably never deliver on the bank’s ... »

Small Business Banking Steady in September

According to figures just released by the BBA (British Banking Association) small business lending continues to be relatively healthy. According to their latest report Small Business Support – September figures There are an estimated 540,000 term loans (out of some 3.9 million small business banking relationships) which have a total outstanding value of over £45.3bn. The BBA’s statistics director, David Dooks, speaking about the latest data, said: “September’s gross lending of £564m was on a par with September 2009 and reflected more than 10,000 new small business loans being granted in the month. However, the primary banking relationship for small businesses remains focused around operating current and savings accounts, where some 50,000 new relationships are established... »

Government Calls for Market-led Small Business Lending

The Government has called for lending to small firms to be more market-led and less state-regulated, in a review announced by Business Secretary Vince Cable. The proposals have been outlined in a government green paper, Financing a Private Sector Recovery, and call for market-led solutions to small business funding needs. The paper includes proposals to improve access to bank lending for small firms, as well as encouraging alternatives to traditional lending, such as private equity, venture capital and business angel investment. It suggests that banks and private finance institutions should offer a more diverse, competitive range of funding options, with the Government just bridging the gaps. “I’ve heard the problems businesses are facing in getting bank loans up and down the country... »