MIp26_1109.qxd 21/10/09 16:44 Page 6
26
Commercial Finance: News
Business confidence returns
With three quarters of businesses businesses as those who enjoyed extra funding for expansion while significant market recovery, it is
confident about their prospects in profit growth in the first half of the 11% of hospitality and leisure striking that twice as many want to
the next six months, new research year. companies and 10% of travel firms borrow to expand rather than just
from Santander Corporate Banking Businesses with a turnover of feel they need additional borrowing to survive.
has found that one in seven UK between £1 million and £5 million to ensure their company survives "The economic downturn has
businesses (15%) are looking to are the most optimistic with more the current economic downturn. focused minds and businesses have
increase their borrowing as business than one in ten (12%) saying they Overall, the majority of adjusted accordingly. It is up to
confidence begins to pick up. need cash for expansion while those businesses (57%) say they are banks to adjust as well and for the
Interestingly, twice as many with an annual turnover of more happy with their current level of role of banking in the UK economy
companies want to borrow so they than £25 million are less likely to borrowing while almost one in five to be redefined. We are committed
can expand their business versus want to borrow. The research shows businesses are looking to cut their to building strong relationships
those that need increased funds to 7% of companies with a turnover debts (17%). based on an understanding of the
keep their companies afloat (10% v of more than £25 million say they Steve Pateman, head of business and its needs, before
5%). The demand for borrowing need cash for expansion while 4% Santander Corporate Banking, said: providing them with solutions and
for expansion points to increased need increased borrowing to ensure "It's encouraging that increased services that fit their individual
confidence and underlines the their business survives. confidence amongst UK businesses requirements. Banks need to focus
positive message in Santander's Analysis shows 20% of wholesale is feeding through to borrowing on customer relationships and
Business Confidence Index, despite firms and 19% of construction and needs, and while it's arguable taking prudent and sensible
falling profits for twice as many building services companies want whether we are seeing any commercial risks."
UK ‘sleepwalking’ towards recovery
Don't abandon SMEs
British businesses, still reeling from Those businesses that have State aid rules must not force banks Guarantee (EFG) scheme, the move
the effects of recession, are ill- started to prepare for recovery are to abandon small businesses, says was designed to stimulate the flow
prepared to face a return to clear about the importance of FPB. of credit to consumers and
economic growth, even though they taking action. Two thirds (66%) say The Forum of Private Business businesses at a time banks are
are aware of the need for action, they need to act now in order to (FPB) is urging the European trying desperately to recapitalise.
according to a new study from benefit, while two fifths (42%) say Commission not to force the UK’s Ministers have also extended the
Lloyds TSB Commercial. they don't want to lose out when part-nationalised banks to abandon scope of the EFG to cover
The research reveals that a third the recovery arrives. A further 14% more than two million of their overdrafts and invoice financing
of firms (31%) have not taken any say they learned their lessons in the small business customers. arrangements, as well as loans, in an
steps whatsoever to prepare their last recession. According to reports, the attempt to ensure that UK bank
business for the upturn, and even The steps taken by those firms Commission is preparing a ruling lending meets its targets.
more (36%) don't believe they need who have begun preparing is under which Lloyds TSB and the The banks are reassessing how
to do anything to ensure their varied. A quarter (27%) have Royal Bank of Scotland (RBS) will they manage their lending
business is ready to benefit as the sharpened up processes and each be required to shed 10% of the portfolios, and holding them to the
recovery starts to gain momentum. working practices, and the same small businesses on their books in letter of the European
Amongst the 31% of firms that number has made efficiency order to avoid contravening its ‘state Commission’s state aid rules would
have not taken action to prepare for improvements. One in ten (10%) aid rules’. The final decision will be mean small firms bearing the brunt
a recovery, 17% admitted that they have sought additional funding, made by the EU’s Competition of competition law. The FPB
had not even thought about the while 6% have boosted research Commissioner Neelie Kroes. believes that sacrificing these firms
steps they might take, and yet there and development efforts. Small but In October 2008 the would unfairly punish them for the
was widespread recognition (43%) significant numbers (5%) are Commission published new actions of the banks and
that taking such steps would be working to establish international guidelines relaxing the rules significantly undermine economic
essential if they were to survive in networks, with a view to improving governing the state funding of recovery in the UK.
the long term. Almost half the firms export prospects. The same financial institutions, which are “Our members are telling us that
questioned claimed they did not numbers are looking more closely imposed to avoid distorting the banks are dragging their heels
need any more help to prepare for at the opportunities presented by competition across the EU. State aid and driving up prices when it
the recovery. the green economy. can be provided for ‘as long as it is comes to lending to small
A ‘wait and see' attitude seems to John Maltby, managing director, necessary to cope with the current businesses,” said the FPB’s policy
prevail even though half of the Lloyds TSB Commercial said: turmoil in financial markets’. representative Matt Goodman.
businesses surveyed (51%) have "Recession has weighed heavily on However, it must avoid ‘unjustified “This is despite the Government
seen the lead that well prepared UK businesses and it is easy to see benefits for shareholders of bailing them out at record levels
businesses benefited from during why talk of a recovery might bring financial institutions’. and underwriting lending via the
the last recession. This attitude welcome relief. But in the same The UK has injected £37 billion EFG. But it would not be acceptable
prevails despite widespread way that we have encouraged firms into three of the country's largest to allow two million small
recognition amongst businesses of to take action to survive the financial institutions in the past businesses to be cut adrift in
several risks which might leave downturn, they will also need to twelve months. Along with its retribution for contravening
them unable to exploit the upturn. prepare for the return to growth.” subsequent Enterprise Finance European State Aid Rules. ”
November 2009 Mortgage Introducer www.mortgageintroducer.com
Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44