Monday
14th November – FOR IMMEDIATE RELEASE
Claims by the banking
industry that they are striving to meet their obligations under the terms of Project
Merlin, even if they haven’t done so for two out of three quarters of this
year, have been attacked as false and misleading by small business
representatives following the latest research from
the Federation of Master Builders (FMB).
Brian Berry, Director of External Affairs at the FMB
said:
“Despite the new figures on lending through Project
Merlin showing that the UK’s major banks lent £18.8bn to SMEs in the third
quarter of this year, our members are telling us they are still finding it
difficult to access finance. More than 57% of respondents to our recent survey reported
that the bank that provides their credit facilities had made some form of
adverse change to their lending policy towards the firm, either by withdrawing
credit facilities or by increasing the cost of them. . Another separate survey,
carried out around the same time told us that nearly 40% of small building
firms have seen their lending charges increase over the last year. It seems
that the banks have decided that it is small businesses’ turn to pay for bonus
season this year.”
Berry continued:
“The behaviour of the banks is completely unacceptable
and is holding back delivery of growth and jobs. Nearly 58% of survey respondents told us they had been
unable to implement growth or investment plans because they had been unable to
raise the necessary funds from the bank, and nearly 49% of respondents told us
that they had been unable to implement expansion plans that would have created new
jobs.”
Berry concluded:
“We are pleased that the Government has started to
recognise that commercial lending isn’t working for UK businesses and has
allocated £95 million from Regional Growth Fund for grants to support SMEs. However,
the majority of SMEs aren’t looking for £500,000 and a commercial loan on top.
Instead, smaller businesses must be encouraged to approach the banks
responsible for distributing the fund so they can start to help repair some of
the damage done by the financial crisis.”
ENDS
Note to editors
Key facts from the FMB’s September survey of
its members:
Ø
Over
57% of respondents reported that the bank that provides their credit facilities
had made some form of adverse change to their lending policy towards the firm,
their through withdrawal of facilities or by increasing the cost of them
through higher charges and interest rates.
Ø
Nearly
40% of respondents reported that their business banking costs had increased
over the past year.
Ø
Over
35% of respondents had been refused all new credit facilities that they had
requested.
Ø
Nearly
38% had been refused credit by a bank that had previously considered them
creditworthy because they operate in the construction sector.
Ø
Nearly
49% of respondents had been unable to implement expansion plans that would have
created jobs because of restricted access to credit.
Ø
31%
of respondents had had been forced to lay off staff due to cash flow problems
that could have been solved with credit.
Ø
Nearly
58% of respondents had been unable to implement growth or investment plans
because they had been unable to raise the necessary funds from the bank.
Ø
Nearly
49% of respondents had lost business because a bank had refused funding to a
client for a project that otherwise would have gone ahead.
Ø
Around
a third of firms were aware of a firm in their area which had requested a
bridging loan, been refused, and wound up as a result.
Housing
Ø
68.5%
of house builders said that lack of mortgage finance was preventing potential
clients from buying form them, and 66.7% said that this was causing them to
slow the rate at which they build houses.
