Small businesses do not believe Government moves to force banks to respond positively to the recession are working.
In a survey carried out by the Forum of Private Business (FPB) in early March not one respondent believed bank support had improved. Half reported no improvement and the other half felt the situation was getting worse.
“Our fifth Economic Downturn Panel survey highlights the continued disparity between falling interest rates and the actual cost and availability of credit,” said the FPB’s Chief Executive, Phil Orford.
“Our members believe that they are perceived as high risk and that their banks are taking advantage by keeping rates high, increasing charges and requiring more security.”
The FPB is also concerned that lending applications submitted by small businesses are not being gauged accurately because of a lack of experienced bank mangers in local regions who are able to build relationships with business owners and judge them on a case-by-case basis.
One member of the FPB, who wished to remain anonymous because of ongoing issues with his bank, has had his overdraft rate increased from 3 per cent to 7 per cent above base rate.
“It’s going to be interesting to see how the banks react long term. My rates have increased by 233 per cent, compared to what they were before,” he said. “The Bank of England is reducing interest rates, but the banks are adding sly little charges. I blew my top with them because we’ve been with them for 30 years and we’re a steady business. What they are doing is stupendous. I’ve had to make two of my staff redundant.”