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News - 20 July 2012

Do SMEs have an option to High Street Banks?

An overwhelming number of small firms (94%), says new research from the Forum of Private Business, agreed that access to finance is important to restoring a more stable business environment by providing that additional factor - business confidence.

However, 40% of those small businesses said that their cashflow situation has not improved lately. It also shows that many small businesses still look up to the banks for much-needed capital but they are still not getting the finances they need.

The report follows from the recent news of a rash of high street banking problems over the last few weeks. It started with huge problems at NatWest, RBS and the Ulster Banks where a technical fault caused days of chaos amongst domestic and business customers alike.

Then came the issue with small businesses being mis-sold complex interest rate hedging products or interest rate swaps. The Financial Services Authority (FSA) found Barclays, HSBC, Lloyds and RBS guilty of a number of poor practices and reached agreement with the four banks to redress the victims without the additional cost of involving lawyers and/or claims management companies to the small firms.

And then came the news of the attempted manipulation of the London InterBank Offered Rate (LIBOR) by Barclays, for which they were fined £290m by the FSA. This led to the resignation of its Chairman, Marcus Agius, and the CEO, Bob Diamond, fierce debate in the House of Commons and a grilling by the Treasury Select committee of the most prominent people involved in and around the rate rigging scandal.

Tonmoy Kumar, Manager of the Accounts Department of ABDS says:
"Small business owners are likely to feel vindicated that the banks are being taken to task publicly. There appears to be a perceived lack of options for small businesses when it comes to banking, despite there being other sources of funding available to SMEs such as Enterprise Finance Guarantee Scheme, Business Angels, Venture Capital and Enterprise Capital Funds. However, Entrepreneurs believe banks can do a lot better and are calling for improved levels of service, including more branches, faster and more transparent decision making and greater choice."

If you need any help and advice on this or a similar matter don’t hesitate, contact Lavinia Newman, Stuart Coleman or Tonmoy Kumar NOW to discuss how ABDS can help in all your financial planning and business advice.


ABDS Chartered Certified Accountants of Southampton.
Tel: 023 8083 6900  E-mail: abds@netaccountants.net

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