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Would local lending decisions benefit growing contractor accountants?

Following the news last week that the big banks could miss the SME lending targets agree by Project Merlin [1], the Forum of Private Businesses called for better competition, local bank managers to have lending powers and more investment in regional branches.

The chief executive of the FPB, Phil Orford, said the Forum wants banks to invest and regional services and give local bank managers the power to make lending decisions as they are best placed to understand individual local companies, which could include accountants for contractors. The current over-centralised, tick box mentality must go, he added.

The Project Merlin banks released a joint statement claiming that demand for small business [2] funding has declined. However, the latest survey of small businesses from the Department of Business, Innovation and Skills discovered that over a quarter of SMEs looked for finance last year and just over half of them had difficulties getting funding from the first institution they went to.

Orford went on to say that regardless of the banks’ comments, there is still a pressing need for affordable funding. The main problem is that mainstream lenders are increasingly alienating small businesses. The big banks dominate and this has led to a lack of competition. Although there are a few innovative funding platforms, they are struggling to break into the market.

HSBC has said it is willing to welcome firms with viable propositions. In fact HSBC’s head of small business banking, Huw Morgan, said the bank would like to see more companies asking for funding.

He went on to say that businesses are now feeling more positive about their ability to grow. A lot of firms are scrutinising their customer base to see how they can expand by entering new markets [3] and offering more.

Morgan finished off by saying that the bank will fund firms that have done their research and have a clear business strategy.

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Image: Abandoned [4] by kyz

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