Banks Still Reluctant To Offer Business Loans
Despite billions of pounds worth of government loans and promises from all the major high street banks that they are returning to the personal and business loan markets, it would appear that many banks are still extremely reluctant to offer loans to small, medium and newly starting businesses, according to new research from Your Business.
Although the majority of UK banks and building societies are advertising business loan products and saying that they have funding available to give a much needed boost to many small businesses, when it comes to actually applying for a loan, many are finding that their application is declined, without adequate explanation.
In an experiment to test this theory, a specialist business finance broker was asked to create the ideal customer with a perfect business model and excellent credit rating and then use this customer to apply for a business loan with all the major high street banks. It would be reasonable to assume that most lenders would jump at the chance of offering this customer a loan, but there was a great reluctance amongst all the banks, with most lenders demanding some type of security for the loan, claiming that this was a condition of the government backed lending scheme.
Other banks took the clients details saying that they would phone them back with an answer and then failing to do so altogether.
The results of this survey seem to be at odds with what the banks are telling us all is actually happening and also what is supposed to be happening since the government invested billions of pounds into the banking sector for this very purpose. Has this simply been an isolated case where the lending criteria did not fit, or are the banks telling us all a tale in order to keep the government happy and off their backs?
