Small business loan applications rejected

More than 40% of small businesses loan applications are turned down, according to new research by the Federation of Small Businesses (FSB).

As detailed in its 'Voice of Small Business Index' there has been an increase in the number of businesses being refused finance, in spite of government measures to try and boost access to finance such as the Funding for Lending Scheme.

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What useful purpose do bankers serve ?    3 thanks

Midlands Accountancy | | Permalink

The banks caused the recession, and now they are keeping us in it.

Their lending policies caused both private individuals and companies to borrow beyond their means, and now, their short term greed is pushing more and more people, both private and corporate, into bankruptcy.

Still we are treated to the annual spectacle of greedy bankers awarding themselves obscene bonuses regardless of whether or not they have achieved anything, and government seems unable or unwilling to take any positive action.

WE, the taxpayers, bailed out many of these banks, yet they repay us with exhibitions of naked greed, and, with policies which are strangling small businesses and slaswhing the living standards of householders.

Despite record low interest rates, the banks are gradually increasing mortgage rates. Every pound they take in extra mortgage interest is a pound that is not spent on the high street.

A cynic or a conspiracy theorist might almost think that the bankers were deliberately trying to destroy Britain.  

 

 

Does it every rankle ...

JC | | Permalink

That the very same bankers who are deciding upon loan applications operate in banks that are precisely the ones who were incapable of keeping their own house in order & needed taxpayer bailouts

Rather like the UBS trader currently in the news - http://www.telegraph.co.uk/finance/financial-crime/9549050/UBS-trader-Kw...

Now lets look at Mr Adoboli own track record on personal trading - clearly if you are £120k down on your personal trading then you are hardly the right material to be a bank trader because all the indications are that the approach taken is gambling rather than trading.

The fact that he is a gambler is also borne out by (we are informed) running 'naked' trades in his working life - which got him into this situation in the first place. Do these bank compliance guys never learn from Nick Leeson (Barings episode)

The fundamental questions are:

  • How did he get to the position of trader in the first place - one would assume long service over 5 years (promotion from within) rather than resruited on proven track record
  • Why was nothing done about is personal trading despite being aware of the position
  • And whilst we are about it, all the internal compliance people should be for the high jump

Seems like a few more heads should be on the block as well as that of Mr Adoboli - so start off with his immediate superiors and go up the chain; only stop sacking when those above did not know about his personal trading

Paul Scholes's picture

So, cut banks out of the equation    1 thanks

Paul Scholes | | Permalink

Peer to Peer lending arrangements will become a significant part of lending/borrowing both for business and individual.  Have a look at Funding Circle for example.

Government talking the talk but not walking the walk?

stenhousej | | Permalink

It does seem that the present Government and the Chancellor in particular, is very keen on headlines but the results of those headlines amount to very little or will only come about in several years time. The latest announcement is a Bank for Business. Having an idea is great but a Business Plan requires answers to such questions as when, where, why, who, what and how? It would be interesting to scrutinise the plan for the Bank for Business and look at the answers to those key questions. I am very doubtful regarding the effectiveness of another bank when there are organisations in place that could do the job –now. There are currently several sensible options in terms of sourcing finance for business. The problem is that these options are not promoted as clearly as they should. The government would be far more effective if their efforts regarding headlines turned to promoting and providing more support to these existing organisations. Community Development Finance Institutions (CDFIs) exist all over the UK and they are very strong in the USA. It is their job to lend money. I have been associated with a CDFI in Eastern England for several years.

Foundation East provides loans of £500 to £50,000 to existing and start up business, when those companies have been unable to obtain funding from a bank. Since the start of this financial year FE has approved loans totalling almost £500k to organisations that faced financial exclusion and they have an abundance and variety of successful case studies. £1 million of lending for the full year is very possible.

In Essex, one of the counties in which Foundation East operates, there was, a few years ago, an unsuccessful attempt by the Council to create a Bank of Essex, which would offer loans to businesses. The instruction now is to refer potential clients to Foundation East. Although the idea behind the Bank of Essex was worthy the fatal flaw was the lack of a strong and experienced administration and infrastructure to support the loan activity.

Foundation East has been providing loans since 2004 and has an experienced personnel who manage their portfolio professionally. I am seriously concerned that reinventing the wheel is totally wrong. I am convinced that providing more oil to wheels that are already running well and could run faster is the answer.

It look like a classic

LisaBr | | Permalink

It look like a classic example of tax breaks allowing tail to way dog - making an investment you'd never otherwise logically choose. And the "junior" stuff sounds like just a marketing gimmick. Or two examples of this common thing around financial products of making life unnecessarily complicated. You'd probably be better off managing your own (adult) investments applying carefully for online loans no faxing and other borrowing options and giving the kid the money (even taxed) at the end. I just invest for kids via simple plans.