More than half of Lancashire businesses going to their banks for cash to grow their businesses have been refused, a new study has shown.
The survey, conducted for the Lancashire Evening Post by the North and Western Lancashire Chamber of Commerce, showed 59% of firms were knocked back by lenders, with nearly half expected to sign up to greater than expected security on loans.
The vast majority (79%) said they wanted to expand, including investing in growth and jobs with the average company was asking for less than £170,000 from their lenders.
Of those businesses not seeking to borrow, 22% said they were put off by the perception they would be knocked back, while the majority (65%) said they did not need the money.
Norman Tenray, chairman of the Chamber’s Economic and Finance Policy group set up to lobby lenders, said his business, Longridge-based builders’ merchant OBAS UK, had to fight a long battle to secure funding last year.
He said: “I have come across countless businesses which faced the same problems, and the answer is simple, there needs to be more honesty, clarity and transparency to business.
“Businesses have done incredibly well to survive the past five years, the only way we are going to get back to growth is by working together for a better future.
“Our story had a happy ending, but unless we get more understanding from the credit risk teams in head office, I cannot say how many happy endings there will be.”
The research also showed:
53% of firms were seeking finance, with most (79%) seeking it to expand their business;
78% said they would be able to grow if they could get the money;
67% of firms have had their banking facilities reviewed in the past year, and 43% of these were offered the same facility at a higher cost;
59% of applications for new banking facilities were turned down by the lender;
Nearly half (47%) of firms said the level of security they were asked to provide as “above or well above” what they expected.
Ireme Graham, managing director for business finance and strategy at the British Bankers’ Association, said it now had 1,000 mentors working with businesses.
She said: “Banks are lending to businesses. £74.9bn went to small businesses in 2011, which is £8bn up on the year before, ” she says.
“I think these figures, coupled with what we are doing with support, shows we are doing a lot. But there is always more we can do.
“We are setting up links with angel investors to create chances, looking at what it takes to develop and grow businesses, and strengthen our appeals process, to let businesses challenge any refusal.”