By Daniel Hunter
Business Secretary Vince Cable, in a speech in London yesterday (Wednesday) at the European headquarters of business and financial markets news specialist Bloomberg, criticised banks for still failing to lend enough money to small and medium-sized businesses (SMEs) and urged them to publish lending data broken down by local area.
Dr Cable said there had been “a remorseless decline of credit availability for SMEs” adding that lending to the sector “requires people with skill, understanding, and patience”, like traditional local bank managers. Members of the UK200Group of independent chartered accountancy lawyer firms comment on his views.
Richard McNeilly, partner at UK200Group member firm Dains LLP, said: “It’s probably fair to say that when the coalition was formed the banks were still in crisis and there were few (if any) credible alternatives. The landscape has changed and SMEs need to get the 2013 message — funding is available but it may not be available on the High Street.
“Whether it is peer-to-peer lending through new providers such as ThinCats.com and the Funding Circle, private equity for high risk/high reward opportunities or through one of the many regional funds, such as Finance Birmingham or the Derby Enterprise Growth Fund, good businesses can obtain funding.
“In my experience, banks have also got their act together over the past couple of years and they have a better appreciation if what represents an acceptable risk. As a result of this new landscape, we continually find a home for well thought through, viable propositions.
“Business owners (and Vince Cable) need to ask themselves whether they have a viable business plan and whether they have sufficient skin in the game to justify third party funding.
“Let’s be realistic. The banks are not about to delegate lending authority to local branches unless the risk is minimal. This means that even if local bank managers had discretion only the best businesses would benefit — but they don’t need the help. The principle is right but I’d prefer to be pragmatic and start talking about what help is available rather than what isn’t.”
David Whiscombe, director of tax services at UK200Group member firm Berg Kaprow Lewis, said: “Local bank managers who know their customers and communities make better decisions than do suits in regional tower blocks. And district tax inspectors who knew their taxpayers and communities used to make better decisions than do suits in regional tower blocks.
“But has that stopped HMRC from dismantling the network of local district offices over the past few years and replacing it with call centres which don’t answer calls, FAQs which no-one has ever asked and web pages which aren’t kept up to date?
“Of course not: what matters isn’t what works but what is cheapest. Before Mr Cable tells the banks how to run their businesses he should talk to his colleagues in government about how they run theirs.”
David Ingall, consultant, UK200Group member firm JWPCreers, said: “The government and the regulators have hastened the demise of the local bank manager. The incessant demand for a standard response to any request for banking facilities, in the wake of the credit crunch, has resulted in credit scoring and centralisation.
“The law of unintended consequences rears its ugly head again. Dr Cable must, along with others in power, stop this persistent blaming of the banks, when the responsibility in many ways lays at their own door.”
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