We hear enough about government initiatives and schemes to make banks lend more to the small business. However we never really seem to see a great shift in delivery or genuine desire to lend to the SME sector.
There are often good reasons why loans for business are declined, refused, knocked back etc.
In many cases the loan may be unaffordable, it may be too speculative or the conduct of the business’s bank account may be enough for a bank to decline at the outset.
Our view is a little more pragmatic.
Small Loans For Business
If a bank is lending £5k, £10k, £30k (in other words under £100k) then they are going to be looking for a way to make a quick decision.
Most banks will use a system of credit scoring. This means they can make a quick decision based on statistical information of similar businesses.
The issue here is that most banks will only use this system up to a certain level of loan, say £30k. Above this amount they will want a more in depth view of trading, risk, financials, forecasts etc.
What this means is that a bank could be spending £5k on management time, systems, other labour etc to reach a decision on a loan of £50k.
So when we wonder why an apathy to provide loans for business exists, it could be down more to margin than desire.
Where To Get Loans For Business
The answer for loans between £20k and £150k is to stop using the bank as your first point of call. There are other providers who use more streamlined processes, who don’t have the overhead or corporate structure. As such they can make the decision quicker and at a lower cost.
If you are wondering where these providers are then the answer is to ring us. Drop us a line with your basic wants and we will give you some ideas.
You can also download our enquiry form (Finance Fact Find nonsign) and fax or email it back to us. Simples….
If you have any comments about this article then please add them above, or contact us via the website.