Partner Article

Large and small businesses still suffering from high bank charges

Both small and large businesses have experienced a reduction in bank lending over the last three months, according to a new survey.

Despite historically low interest rates, the British Retail Consortium (BRC) has said a third of all small and medium–sized (SME) retailers and a fifth of large retailers have experienced a reduction in bank lending.

The study comes in the wake of Chancellor Alistair Darling’s comments, saying he was “extremely concerned at what the banks are doing for the small and medium-sized businesses in this country.”

44% of SMEs said the cost of lending had increased, according to the survey, with more than half of large retailers saying the reduction or withdrawal of trade credit insurance has adversely affected their business.

Jane Milne, BRC’s Business Environment director, said: “As the Government launches its employment schemes, it’s outrageous that some retailers are being forced to let staff go because of a lack of affordable credit.

“The poor availability of bank credit is undermining stock levels and retail employment. We understand the banks’ current cautious approach to lending, but there’s no reason why they need to stop loans to fundamentally sound businesses.”

A recent study by theFederation of Small Businesses (FSB) highlighted the worry of over charging by the banks, with some respondents saying they were seeing double their normal interest rates, increasing to around 20%.

FSB Policy Chairman John Walker said: “Things are tough for small businesses at the moment and they don’t really need banks charging over the odds interest rates on their loans and overdrafts – especially as the Bank of England’s interest rates have been getting lower and lower in an attempt to stimulate the economy and bank lending.”

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