Small business issues pertaining to unfair banking practices are not new. However, as the credit crunch and subsequent recession hit, small businesses were faced with increasing difficulty obtaining lending from their banks. Once again, last month, figures from the British Banking Association showed that business lending was in decline. There has also been much frustration regarding the length of time small businesses and contractors have had to wait to find out if their application has been accepted or declined.
Now the Forum of Private Businesses is asking small businesses to take part in a survey, which will ask for their banking experiences. This is being conducted on behalf of the Office of Fair Trading. They want to know how the big banks are treating small businesses. The Forum is trying to encourage as many small businesses as possible to participate in the survey to provide the OFT with plenty of evidence of unfair treatment.
Thomas Parry, FPB Research Manager, commented: “Clearly, the issue of the way banks treat small firms has received an enormous amount of attention recently and sparked a lot of debate.
“One the one hand, groups like the Forum have been arguing that viable smaller firms are being unjustifiably denied credit, or offered it at an extortionate cost, by risk-averse banks which often don’t understand their needs.
“On the other hand, the banks and their industry groups have claimed that lending is down simply because demand is down and they are doing everything they can to increase the flow of finance to business. There is also a wider debate about competition between banks, with some critics arguing that smaller firms, particularly in Scotland, face a limited amount of choice in the marketplace.”
Mr Parry concluded: “We hope this survey will provide the OFT with clear, empirical evidence and reinforce the valid concerns many small business owners have over their relationships with their banks, and the banking industry in general.”