BANK initiatives to boost small business lending have not gone far enough, claims employers’ organisation the Forum of Private Business.
The call comes just a year after the launch of the British Bankers’ Associations’ Business Finance Taskforce. A survey by the forum suggested that the taskforce had not yet achieved its aim of repairing the relationship between banks and small businesses.
Some 24% of small business owners on the forum’s cash flow and finance panel have called for more choice between “traditional” banking services, while 21% want better access to alternative forms of funding.
In total, 26% of respondents said they were seeking alternative financial products, with 21% of these interested in sourcing them from outside the main high street lenders and just 7% from mainstream banks.
Forum senior policy adviser Alex Jackman said: “The Business Finance Taskforce produced 18 recommendations, some of which have been extremely useful – particularly in the areas of mentoring, lending appeals, finance readiness and funding for high-growth enterprises.
“But the verdict so far is that much more needs to be done to get cost-effective finance to the businesses that need it most.
“There is falling demand from small firms, but that does not mean a lack of need for affordable funding. It reflects just how alienated entrepreneurs are by the restrictive risk criteria and steep costs being imposed by mainstream lenders. As a result, there are increasing signs business owners are looking elsewhere.”