We’ve been saying it for a while now. The banks are trying to lend, and there are businesses that need capital injection, so why do we find it so hard to marry the two together?
The Managing Director of RBS has announced that they cannot “force businesses to borrow” and suggest they have £20 billion tucked away which is available to small businesses.
So what is the answer? Better applications, more initiatives or an increase in moaning? We’ve got the answer.
Yes RBS is right by saying that business finance is available and that they are prepared to lend and equally SMEs are right to say that banks are very difficult to deal with and throw up too many hurdles. I’ve mentioned on previous occasions that obtaining a business loan is like entering a boxing match – you have to be prepared to go the full 15 rounds and roll with the punches. Nobody wants to go back to the lending climate of 2007 (the days of 125% mortgages), so everybody agrees that there have to be sensible conditions for lending.
Additionally, if an application for a loan is ill-prepared and has been scribbled down on the back of an envelope or if the business plan has not been thought through then it would be unfair to expect the banks to lend on poor applications. So our answer is simply to apply common sense and better communication. It sounds daft, but both common sense and better communication will increase the amount of business lending, benefitting both parties.
Let us know what you think about the current business lending landscape, we would be interested to hear if you’ve had trouble with your bank.