"Enterprise Adviser" magazine has featured the results of our recent research in this month's publication
Small businesses are being urged to step up their preparations ahead of annual overdraft renewal meetings after new research revealed that main banks are enforcing adverse lending changes to almost one in two firms.
The survey by The Corporate Finance Network (www.TheCFN.org.uk), whose member firms advise over 20,000 SMEs, found that 47.8% of respondents had seen some changes in lending terms during the last two years.
The research was undertaken to discover how banks are managing their customers' overdrafts and loans. The most common change enforced upon customers' lending facilities was a reduction in their overall facility, with one third of respondents citing this as the main change.
Kirsty McGregor, chairman of The Corporate Finance Network, said: "Although I had heard anecdotally that banks were restructuring many businesses' lending facilities, a task that many institutions need to undertake in order to repair their own balance sheets, I was shocked to see that the numbers were so high. This is very worrying for SMEs and businesses need to communicate better with their banks."
Ms McGregor said the reported continued decrease in net lending further supported The Corporate Finance Network's research, and the much-heralded launch of the National Loan Guarantee Scheme would not rectify this particular issue at all.
She said: "This research demonstrates another major shift in the lending environment and all businesses should concentrate on being well prepared for their annual overdraft renewal meeting to encourage the continued relationship with their bank on terms which are acceptable to both parties."
The average turnover of the responding businesses was just under £2.6m. among the questions, survey participants were asked what rate of interest they were paying at present. The average overdraft rate was 4.75% and the average loan rate was 4.7%. The Corporate Finance Network said it was surprising that there appeared to be little variation in the borrowing costs between these two very different finance products.
The full article can be found here http://www.enterprise-adviser.com/?p=3746
The survey is still open and can be completed by following this link https://www.surveymonkey.com/s/TheCFN_BankInterest