Restoring confidence in bank loans to SMEs
Lord Cromwell, Co-chair for All Party Parliamentary Group on Banking and Finance, recently wrote a Letter to the Editor at the Financial Times. Cromwell writes on behalf of business leaders throughout the country, asking for fairer lending terms between banks and Small, Medium Enterprises (SMEs).
Cromwell makes a claim for an independent tribunal to be held between businesses and bank lenders. This tribunal would give businesses a platform to voice and resolve disputes, and help “restore confidence” to UK banks lending to SMEs.
Any business with more than ten employees is currently forced to rely on the banks themselves to resolve disputes, which not only makes an objective solution difficult, but requires more funds than most banks have.
Cromwell brings up the recent external legal pocket that the Royal Bank of Scotland has set up, allowing for a “transparent and independent process” and a “fair and confident solution”.
How UK banks and SMEs do business is an important part of the economy, which Cromwell further calls the “seedbed of the UK’s future prosperity”. He gladly adds that there are more legislative figures who recognize that new change is necessary, but insists any change needs to happens soon.
For SME’s who are looking to alternatives to taking on additional borrowing from their bank, the Credit Protection Association would be happy to talk to them about freeing up capital already on their balance sheet by encouraging their customers to improve their payment behaviour and by collecting on their overdue unpaid invoices they are owed.
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