"Business dragon Theo Paphitis asks if the banks and the government are doing enough to help Britain's 4.7 million small businesses survive the recession".
they seem to be doing everything they can to kill even profitable businesses by removing overdraft facilities without notice leaving businesses in serious poop cashflow wise.
Someone should take these bankers and stick their insurance offers where the sun don't shine. Maybe then they will realize they have to actually lend money to make money.
The banks are panicking but they are so large that it is difficult to keep control without rigid policies.
The stories I've heard have tended to be linked to under-pressure industry sectors but it is extremely unfair to put massive pressure on small businesses by radically changing terms.
But at the same time it seems easy to criticise banks. Look at the fuss over Anthony Worrall Thompson's restaurants that went into administration. he seemed to think the bank should put money in when he wasn't prepared to. How do that make sense.
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Quite clearly the banks are unable to help and really don't know what to do.
A lot of the problem comes from the accounting and regulatory requirements which limit their ability to lend based on the value of their assets. Where these assets are stocks and shares which are loosing value their ability to lend goes down. Of course when they then need to cover the losses on these investments they have to sell (dump) other shares which further depresses the market.
My bank account went overdrawn last Monday, and yesterday I had an automated call from Lloyds TSB telling me that they've kindly paid everything that was due to go out (my £3 monthly silver charge), and that as my account is now £2.34 overdrawn as a result I've been charged £15 and £6 per day up to a maximum of 10 days - note, overdrawn - not over an overdraft limit... I was a silly boy as a teenager and had a CCJ at the age of 19, and as a result learned to live without credit -something I'd thoroughly recommend.
I think the banks deserve to go under... the people who lose due to savings are in the minority compared to the people that will gain due to loans. It's in a big part because of banking incompetence that we have this credit problem at the moment, so anyone that says they haven't brought it on themselves is a fool.
But at the same time it seems easy to criticise banks. Look at the fuss over Anthony Worrall Thompson's restaurants that went into administration. he seemed to think the bank should put money in when he wasn't prepared to. How do that make sense.
You are being a bit unfair to AWT. He had very little borrowing of any sort and only needed some help with his cash flow because of the current downturn. It isn't that he didn't have security it is that the bank just didn't (or possibly couldn't) make credit available to him.
The banks are undoubtedly largely to blame for the current crisis; however the media (and Government) obsession with 'making the banks lend' is not constructive in any way.
With one major bank reoprting £25 billion in losses (however it is presented this is a result of irresponsible lending, whether by itself or acquired businesses), it is hardly appropriate to force further lending.
My sentiment, unpopular though it is, is that busineses (and the public) need to be re-educated on how to borrow; and that the media could actually play a very constructive role in this.
Ulitmately the banks have to lend to survive, but we must appreciate that for a significant period of time, his will be tentative and somewhat risk-averse.
Two specific media references previously made:
1. Thoe Paphitis is uniquely placed to ask those key questions as to whether a business is actually a viable lending proposition; though those questions were not raised at all in his programme.
2. From all the press coverage I saw (which was a lot) the message from AWT was that he was not prepared to offer a guarantee considering it too risky. If it's too risky for him, it's too risky for a bank!
I have had endless arguements with Barclays over the years about charges, overdraft limits, what to do with cheques when the local branch shut down a few years ago - having to deal with girls on the phone who sound younger than my 16 year old daughter.
They have never treated my home based business seriously and despite overwhelming security available in our house, would never offer a decent overdraft facility. We stuck with them for 9 years but last week I had enough after another fruitless discussion about the end of March charges they took out.
Last Wednesday (22nd April) I telephoned our local branch of HSBC after being told there was a business manager (In Coalville!). I met him last Friday (24th April) and the account was opened immediately. A large unsecured overdraft was offered and today (29th April) I received my debit card, cheque books etc and the agreement for a credit card machine!
On top of all that I was immediately offered 18 months free banking and the client who told me about the business manager was given a £50 bonus.
I am in the fortunate position of having a useful and constructive relationship with my bank, Lloyds TSB.
However, I think that without doubt the banking sector are out of their depth in the current climate. They simply do not have the depth of skill to lend wisely, have lent indiscriminately for too long, so they dont lend at all.
What is needed is a re-skilling of the banks, and a re-appraisal of the services they provide, and their role in economic recovery.
They should not listen to the government. In fact no one should. By listening to the government, for example, Lloyds made a reckless acquisition and sank their business. Their whole corporate governance team are responsible for this. Making an acquisition for political reasons? Indefensible, however much pressure they were under.
So, I believe government rantings are not the answer for the bank, but a realisation by the bank directors themselves that they need to redefine and reskill their businesses.
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Paul Norman - OrangeTree Development
The reality of the situation in my mind was that the government botched it completely. What they SHOULD have done was not bail out useless banks without having a solid agreement in place, but rather have set up a HUGE fund for business from central government funds. theya re STILL allowing people like northern rock Bradford and bingley etc repossess houses, WHY?
SURELY it would make more sense financially economically and morally, to bring potential repossessions into public ownership whereby the homeowners are transferred from owners to tenants/part owners, as per housing associations, but with the remaining equity being classed as part ownership should they wish to sell. In my mind this would prevent the market being held back by repossessions dragging the market down, prevent over zealous repossessions, keep the family unit intact, and also the community, and actually give the government something for the money they are spending!
Reality for me is that this government shelled out a whole load of money in hast with crap for agreements, and the pigeons are now coming home to roost. yet WE now have to pay the tax for the next 25 years thanks to their incompetence.
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I think your placing a big accusation of incompetence at the door of the government is fair, actually! For sure, none of the political leaders have a demonstrated grasp of economics, and their actions in the face of the economic crisis have been weak. In fact, mostly pointless meddling, and a hasty return to the rules of envy and leftism.
But the banks must take responsibility for their own actions.
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Paul Norman - OrangeTree Development
The Treaury Comittee can't see the logic-gap between castigating the banks for irresponsible lending whilst complaining that they have tightened credit procedures and are looking to make a profit on their lending.
I know that Government are generally out of touch with commercial reality, but surely even they can see the flaws in this?
Constructive approach - educate business on how to borrow, different types of funding and where to find it. Not a headline grabber, but practical!
We have writtenm the the Prime Minister and other bodie on this matter; download the letter from our website Business Funding Portal
Many small businesses are terribly ill-informed about other forms of finance, and how they can relieve pressure on core banking facilities.
Amenities such as Business Link websites provide an overview of most of the options available but, by necessity, they are quite generic in their nature. Business advisors and influencers have a key role to play here, not just when clients are reeling having been rejected by their bank, but in the planning stages and before the crisis happens.
If a business is funded using the right mix of facilities (and spread between a number of sources) the risk of banks 'pulling the plug' are hugely reduced..
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Are the Banks doing enough to Help?
