Partner Article

Banks should make local decisions

Banks should interact more closely with small businesses and decision-making powers should be restored to local branch managers.

That’s the message from the Federation of Small Businesses’ latest publication, ‘Principles of Small Business Banking’, which suggests a code of good practice for banks to follow and which supports more lending to small firms.

A poll of over 500 FSB members found that small businesses want to have a personal relationship with their bank when obtaining finance. Over half (54%) said they choose to communicate in person with their bank rather than via letter, online or over the phone, while 86 per cent said they believed decisions on lending should be made by a local branch rather than centrally.

A majority of small businesses are dissatisfied with their banks although they still rely heavily on them, according to the poll.

Colin Stratton, FSB Regional Chairman for the North East of England, said: “While there have been efforts to restore lending to small businesses in the region and some enterprises are being granted finance, the North East FSB is still hearing negative reports from our members about banks holding back funds from what appear to be extremely viable small businesses. Branch managers still seem unaware or unwilling to promote funds such as the Enterprise Finance Guarantee and businesses are complaining of unrealistic terms on finance applications and that they are not able to speak directly to those making decisions on their credit issues.

“The banks need to remember that the small business community in the region is a vital source of employment and turnover, especially during these challenging times. Communities need all the support they can get especially in the current economic climate. Small businesses are not merely part of the local community, they are the local community.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .