Well – it’s not a good situation is it. SME’s who need funding cannot get it – that’s of course unless they actually don;t need it – ie they are a 100% safe bet. Or unless they are prepared to put their house and everything else they own on the line – for what might be only a 5 or 10k loan.
That is the reality of the current economy.
And that’s bad enough.

But actually – what is worse is that they are even afraid to ask. They are scared that if they flag a potential change in their financial situation then they will be putting at risk the arrangements / loans / overdrafts, that they already have.

From personal experience with the Co-op bank – who we had been with for several years – I think they are right to be worried. In our case we had a 10k overdraft arrangement. We have always had this since we opened the business many years ago. I don’t think we had ever used it. Then came 2009 and we needed to. And what did the lovely Co-op bank do? They wrote to us and said

“Ah, we can see you have finally had to use this overdraft that you have paid us £150 a year for and never previously used. Therefore, we are withdrawing it £500 a month until it is cleared”

Well – actually they said

“We are pleased to renew your overdraft agreement at £10,000 at a reducing rate of £500 per month beginning October” or something similar – but it amounts to the same thing…….

We NEEDED it – so they took it away.

Thanks Co-op. I will remember to never use you in the future for any of my businesses.

Meanwhile – thank God for my new bank manager at the NatWest – Gemma Kirby.

So – you are right to be worried SME’s. I hadn’t even flagged that we had cashflow issues – but obviously using the overdraft I had paid for, for years – was the only flag the Co-Op needed.

Read more from the Telegraph here http://tgr.ph/n0KFu2