The British Chamber of Commerce has recently gone on record to say that financial services providers need to reconsider their communication with their business bank account customers in regards to business loan activity.
Recently released figures from the Bank of England revealed that the largest banks in the country provided £16.8 billion in venture capital to their small and medium sized business accounts during the first quarter of 2011. This was more than £2 billion less than the required level of lending activity in order to keep pace with 2011’s £76 billion lending target.
David Frost, director general for the BCC, stated that the new figures from Project Merlin were disheartening. However he remarked that the figures were just one part of the overall picture, as many businesses have complained that their relationships with banks have been strained both during the recession and directly after it.
Mr Frost also said that business customers have been put off in their finance applications due to a lack of banks’ local relationship management, unclear decision-making, and over-centralised processes. He commented that banks need to have the ability to make local decisions in regards to the financing needs of its business customers, as improved financing amounts goes hand in hand with both local support from banks and greater transparency.
Insurance provider Simply Business’ chief executive, Jason Stockwood, also commented, saying that Project Merlin does not go far enough in providing incentives for banks to make funds available to businesses that need them most. Mr Stockwood felt that it was clear that attempting to secure bank funding is still a massively slow and bureaucratic process that drains both resources and time with little to no guarantees of being successful.