There’s an interesting piece in the business section of this morning’s Telegraph, which highlights new signs bank lending to businesses may be on the increase.
“After a slow start at the beginning of the year,” Federation of Small Businesses (FSB) spokesperson Stephen Alambritis explains in the article, “the high-street banks are at last moving on releasing much-needed credit to Britain’s 4.7 million small businesses.”
We’re going to stop you there, Stephen. While Smarta is genuinely very excited there’s a chance it might finally be able to start adding to its vast and diverse credit card collection again, it does wish to impress upon its readers that unless you are a landowning tycoon with no mortgage and no criminal convictions, it’s probably not worth getting too excited.
Alambritis points out that ‘this encouraging growth in lending... is coupled with demands for an arm and a leg in the way of security and high charges for facilities’ – which essentially means unless you can underwrite your loan with property, a hedge fund or a controlling share in a South African diamond mine, there’s a good chance your application will be turned down.
Even the much-vaunted Enterprise Finance Guarantee (EFG) scheme, touted by the government as the answer to all business’ cashflow prayers, proved to be too much for many struggling entrepreneurs: even though the government pledged to guarantee 75% of the loan many banks still require the full amount to be underwritten by the borrower. Given that loans under the EFG can be up to £1m, that’s a lot of businesses which won’t qualify under the scheme.
Forgive Smarta for its bleak outlook, but the evidence appears distinctly shaky to us. We don’t think we’ll ring our bank manager just yet.