Aug
06 Banks warned again as they prepare to announce big profits
We wrote recently in our blog post “Banks to be pressured to increase business lending” how the Business Secretary, Vince Cable, was putting pressure on the banks to do more to lend to businesses. This pressure looks set to increase massively as the Chancellor, George Osborne, has joined the call with many banks set to report their profits shortly.
Mr Osborne has told the banks it is their “economic responsibility” to increase lending and also to curb what are seen as excessive bonuses with strong profits expected to be announced at many banks this week. It is thought that all of the banks will confirm that they are now back “in the black”. HSBC, the first to report, have confirmed profits of £7billion in the first six months this year!
In response the banks are putting their case to the government to show how lending has improved and that the majority of businesses who want finance are able to get it. Their argument is that many businesses are focusing on repaying existing debt and tightening their belts in these difficult times rather than taking on extra borrowing. They also say that new regulations make the process more difficult for them.
Many businesses have a different story to tell, with banks who were previously falling over themselves to lend money in the boom years now disinterested and making it near impossible to get a business loan at affordable rates.
The true state of the business lending market is probably somewhere in between. Business loans are available but, like the personal lending market, mainstream lenders are extremely cautious and want only the cleanest of applicants with almost cast-iron guarantees of repayment. For everyone else utilising the services of a business loan broker such as Yes Business Loans may be the best answer.