Member Article

Why won’t the banks back small business?

The double dip recession is a term that has been the scourge of the British isles for nearly five years,
as the country has succumb to widespread economic down turn.

Many initiatives have been put in place by the government to tackle the on-going debt, many of
which may, to some people seem foreign and complicated. Others can be seen on a grass roots level.
The trend to stay domestic for your summer holiday for example did not just come out of nowhere,
many people simply cannot afford to go abroad anymore and the government would love nothing
more for you to stay in this country and pump your holiday money into our dwindling holiday
making economy. This summer has done very well for this trend with the Royal Jubilee and of course
the London Olympics.

A lot of the pressure though, to bring us out of the economic slump we have found ourselves in
seems to have fallen onto the small and medium business owners. If more people shop local,
consume local produce and support their local businesses, their community should flourish. If
we were to go back to the state described by Napoleon as ‘A Nation of Shopkeepers’, instead of
importing cheaper goods we would see our economy clamber back to its feet.

If this truly is the case, why are banks backed by the British government so reluctant to help the local
business man?

One example is of business man Michael Sheridan and his furniture business Sheridan & Co. Mr
Sheridan is opening an office in Shanghai in the hopes of penetrating the Chinese market. When
looking for finance to help him get his new office off the ground Mr Sheridan approached his bank
NatWest, part of the government backed RBS group, who, after Mr Sheridan offered personal
guarantees and sought the Government’s Enterprise Fund Guarantee to support the loan, turned
him down.

Mr Sheridan was gobsmacked; he had been with the bank for thirty years and was seeking money
for a genuine business prospect that would bring real prosperity to the British economy. Later
Sheridan & Co. was funded by Australian backed bank Clydesdale Bank and the company are doing
very well in China.

Comparison advice centre, Make It Cheaper, have given their on-going commentary to the situation
and are just as outraged that many small and medium businesses, the type who would seek the
company’s services, are feeling the burn of a loan turn-down from supposed national banks.

Their advice for local and start-up business is to persevere with the situation. Thanks to the
government’s Funding for Lending scheme, which is finally looking after the small businesses
the government claim will bring our country out of recession, around 50% of rejected finance
applications are being overturned after appeal.

This was posted in Bdaily's Members' News section by Jonny Marshall .