Welcome to
Banks still won’t lend
Businessinsight
Despite government measures, FPB members are struggling to access finance from banks
I
n this first issue of the FPB’s new
magazine, we introduce some of
our members and tell you how
they are managing in the downturn.
We also give you help and advice on
accessing finance, new disciplinary and
grievance procedures, and alternatives
to redundancy. We hope you will find
the articles interesting and informative,
and are keen to hear what you think.
Please complete the enclosed reply-
paid card and return it to us with
your feedback.
Contents
News
2–3
Phil Orford
3 G
overnment measures to increase bank UK and warned that the Government must
lending to businesses are still not continually review the effectiveness of its
working, say the FPB’s members. The new financial measures. Since then, the FPB’s
Finding the money
4
Enterprise Finance Guarantee (EFG) – the key Panel has been reporting a more rapid rate
Campaigns update
scheme to underwrite bank lending to small of deterioration in market conditions, with
5
and medium-sized firms – has not countered business optimism also sliding faster and late
FPB in the media
5
banks’ perceptions of small businesses as high payment getting significantly worse. In such
Weathering the storm
6–7 risk. Even profitable businesses are reporting conditions, the continued inability to access
Ask the experts
8–9
that they are still being rejected for loans and finance is putting intense pressure on many
overdrafts. small firms, forcing some out of business.
Member profile
10–11
The FPB recently revealed that the The Government has attempted to
Spotlight on staff
12
Government has imposed a ‘cap’ on the EFG champion what it calls the ‘success’ of the
Managing redundancy
13
to restrict potential government losses from EFG, stating that it is guaranteeing more than
Discipline and grievance 14
the scheme to a mere 10% – a fraction of the £1m in loans a day. Business Secretary Lord
75% guarantee for each loan pledged under Mandelson said recently that the scheme is
the EFG. This is likely to be the major reason ‘on course to guarantee an additional £1.3bn
behind the banks’ continued bracketing of lending to small firms in 2009’.
of many small businesses as ‘high risk’ Although the Government has said that
propositions. 400 loans have been offered under the EFG,
“The financial measures were a welcome research carried out in the FPB’s Referendum
next step in supporting small business lending survey of members in December 2008 suggests
FIGHTINGFORPRIVATEBUSINESSESSINCE
Contact us
and stabilising the economy,” says the FPB’s that 400,000 small business employers will
Chief Executive, Phil Orford. “But this cap need to renew or increase their lending
If you would like to join the FPB
flies in the face of what we thought the EFG agreements by the end of March 2009.
was trying to achieve – reducing the banks’ The Government also appears to be
Call 0845 62 6266 or email info@fpb.org
sense of risk when dealing with struggling-yet- encouraging banks to seek personal
viable small businesses.” guarantees, compromising the stated function
For help on a business issue
The FPB is monitoring the relationships of the EFG to secure lending without resorting
Call 0845 30 722 or email helpline@fpb.org between banks and businesses via its to this. The move is in direct contrast to both
Economic Downturn Panel of members the old Small Firms Loan Guarantee Scheme
For more information on our
(see page 5). The latest results show that and the British Bankers’ Association’s (BBA)
dissatisfaction with the banks has increased new ‘statement of principles’ covering
campaigns or research
significantly, with considerable deterioration small business lending, which were revised
Call 0565 634467 or email campaigns@fpb.org
in access to finance in the last few weeks, and following dialogue with the FPB.
the cost of finance also rising slightly. Many “Even profitable members of the FPB
For general enquiries
businesses are having applications for finance are being rejected under the EFG. Better
Call 0845 30 722 or email info@fpb.org
refused or restricted, while others are seeing provision of overdrafts, in particular, is
loan repayment times reduced and banking essential for much-needed, short-term cash
charges increased. flow liquidity,” says Phil Orford. “But,
To contact our press office
On 28 January, a Treasury Committee contrary to the Government’s claims, it is not
Call 0565 62609 or email phil.mccabe@fpb.org
review of the Pre-Budget Report (PBR) being provided.”
concluded that access to finance is the single For more details of the Government’s
most critical issue facing businesses in the financial package, see page 4.
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