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E-mail news release
The reality of lending for small businesses
After thrashing out Project Merlin with the government earlier in the year, Britain’s largest banks pledged to lend
£190 billion to businesses during 2011. Although the outcome was encouraging, the very fact the talks occurred at
all was symptomatic of what many regarded as a crisis in lending. However, businesses are not finding it easy to
prise open the banks’ coffers.
“For those business that do manage to obtain a loan, they are being hit by a raft of stealth bank charges as lenders
are attempting to persuade small and medium-sized companies to convert their overdrafts into loans that have
higher interest charges and more stringent repayment terms,” said Kenneth Wright, Principal of Stourbridge based
Chartered Accountants, Licensed Insolvency Practitioners and Business Advisers, Wright Associates.
There is certainly some evidence to show that banks are continuing to lend to small businesses as they claim.
However, there appears to be a caveat to this as they are increasingly adding on hefty charges for arrangement fees,
facilitation fees, audit and review fees all of which are in addition to the interest on the actual loan itself.
Mr. Wright has a suspicion that the banks might be fearful of another recession and have become paranoid about
filling up their asset books with more dodgy loans. Certainly, the economy as a whole looks shaky, with the prospect
of several countries defaulting in the Euro zone. “The government really needs to take decisive action. There is an
urgent need to facilitate the flow of growth finance into the economy. Stifling good companies that could grow with
the right support is unforgivable and the opportunity of using banks as a source of lending to small businesses with
good prospects must not be squandered,” added Mr. Wright.
ENDS
October 2011.
Wright Associates
Insolvency & Turnaround - Debt Solutions - Fund raising - Merger & Acquisition - Mediation & ADR
Share Valuation - Forensic Accountancy - Investigation
First Floor, 56/57 High Street, Stourbridge, West Midlands DY8 1DE
Tel: 01384 371100 Fax: 01384 376111
E-mail: kwright@wrightforbusiness.co.uk Web: www.wrightforbusiness.co.uk