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Banks urged to get to know business customers better

Small businesses are welcoming an initiative to bring lending decisions by the banks back to a more personal relationship, according to a study by the Federation of Private Business.

The initiative is a free service available through Business Link that is aimed at building better relationships between businesses seeking finance and banks. Business Link is working to urge banks to make decisions on a more local level rather than at central branches, so business people and bank managers who know each other can thrash out lending agreements.

FPB’s recent economic downturn survey showed that two thirds of small businesses (66%) wanted better local relationships with their banks. Also, 61% said they felt that bank managers had no real understanding of their businesses.

Now, the FPB is encouraging the banks to support the Business Link scheme to show that they are prepared to put their money where their mouth is when it comes to supporting customers.

The FPB survey revealed that small businesses considered that applying for other Government backed lending stigmatised their businesses by making them appear to look high-risk candidates for borrowing.

This was reflected by more than one-in-four businesses (27%) claiming applying for help under the Enterprise Finance Guarantee (EFG) would reinforce this perception.

Another 20% of businesses also responded that they thought if they applied for an EFG loan, the banks would close off other lending opportunities.

"The lack of availability of credit remains a concern and the cost of finance is still high. Many small firms are being rejected simply because of their size or industry sector," said Nick Palin, the FPB's Director of Finance. "The Business Link financial intermediary service delivered locally and for eligible businesses is a welcome step towards helping banks re-engage with their small business customers.

"We are calling on the banks to get behind this initiative publicly so that viable yet struggling business owners are encouraged to explore the help that is available."

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