As the economy continues to recover, businesses across the UK have indicated in a survey that they are mostly happy with the level of support their banks provide.
Research by national business group, The Forum of Private Business (FPB), has revealed that small and medium enterprise (SME) owners across the UK are not willing to change banks despite concerns over access to finance, bank charges and the calling-in of loans.
The survey indicated that over 50% of the small businesses surveyed were happy with their banking arrangements and felt they were receiving good or excellent value for money. Close to 33% suggested that the offerings were average. However, 16% of the business owners surveyed, particularly those that were looking to grow or survive using external finance, felt difficulty in obtaining access to finance from their banks was a cause for constant worry.
In light of the UK economy entering a period of sustained and substantial growth, 15% of SME owners said they wanted more flexibility and less centralisation in lending, 14% wanted greater access to finance and 12% felt banks should shoulder a greater proportion of risk.
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One element the survey did highlight is the fact that small businesses must be encouraged to consider alternative sources of finance; 25% of the survey respondents said they will not consider alternative lending citing cost (35%), awareness (21%) and lack of reliable advice (19%) as the main deterrents.
Speaking about the results of the survey, Phil Orford MBE, chief executive of the Forum of Private Business, said, “A growing economy poses its own issues for small businesses, as they decide whether to invest for expansion. The government, the banks, other lenders and businesses support organisations are all important enablers of growth and need to work together to ensure small businesses are getting the necessary amount of money in the right format.”
Mr Orford, in a bid to increase competition in the business banking sector, revived his call for the government to introduce a shared branch pilot.
He continued: “Competition is partly driven by access in the banking sector. This is increasingly limited by a reducing branch network that continues to decline. This is sometimes cited as barrier by would-be entrants to the banking market. Branch sharing can take one of two, or both, options. Inter Bank Agency Agreements facilitates use of a local bank’s counter by small business customers of other banks. Neutral Shared Branching means any branch can provide basic counter and related services, to agreed operating standards, delivered by a third party provider on behalf of participating banks.”
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