Credit Where it’s Due
Between 1st April 2013 and 1st March 2014 there were 3,518 appeals by SMEs against the decision of a lender not to advance funds to them. Of which 1,116 or over a third were upheld or in other words it was found that the ‘lender’ erroneously refused the ‘borrower’.
Over the same period in 2012/13 there were 3,311 appeals and 1,298 upheld.
These figures were enough for the independent appeals body to announce an improvement in the delivery of financial solutions to the SME market.
Russell Griggs of the appeals body said:
“Every bank involved has changed something about their lending processes based on our recommendations that will benefit both them and also their customers”
The 2/3 of whose appeals were dismissed and the 1/3 that were shown to have been unfairly treated would probably disagree.
Interestingly Griggs’ focus is not on improving lending rates or terms but instead to improved the clarity of the refusal:
“My priorities for the coming year will be making sure that the conversation between lenders and SME customers continues to improve and that awareness of the appeals process increases.
“I aim to ensure all banks can tell their customers clearly and precisely why they were declined for lending and what they might be able to do to change that decision over time.”
The startling reality of the difficulties of SMEs gaining lending was laid bare by the report:
- 43% of SMEs were refused because of credit scores, often personal ones
- 52% of businesses looking to borrow less than £25k were the hardest hit for refusal
The prudent business, borrowing within their means, penalised for an unrelated credit rating.
SMEs – the engine room of the UK economy, when will the bailed out banks wake up?
Similarly to the energy market, MPs have launched an inquiry into bank lending practices, not before time.