November 16, 2012, 12:41am
Stale bank lending
[Re: The real reason businesses aren’t borrowing from their banks, yesterday]
Anthony Browne’s argument about small business lending is stale. In his early days in post, we hoped that the chief executive of the British Bankers’ Association (BBA), would have shifted the debate onto more fertile ground. The enormous rise in lending during the boom years was down to increased lending in the financial and property sectors. The total stock of lending to businesses did not increase much prior to the financial crisis. It is also misleading for Browne to say that only 1.5 per cent of small firms have been rejected loans by his member banks. According to the survey he is citing, a third of all loans applications and a fifth of all overdraft applications were declined. We are also disappointed that the BBA is bringing back old, divisive arguments, rather than stating a clear positive vision to improve lending. By returning to this debate now, it will not help support start-up firms. Furthermore, it will not help small firms looking to export for the first time. We need to restore confidence in the sector – a factor clearly missing from Browne’s article. We want to see a more positive approach to lending like trying to sort out the interest rate swaps mis-selling saga. and introducing more competition through bank and non-bank channels. The government is engaged with these arguments, but Browne is silent.
Graeme Fisher, head of policy at the Federation of Small Businesses
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