Formations Direct, leading UK company formation agents, has published results of its recent survey on bank lending amongst SMEs.
- 70% of those refused at the initial stage expressed surprise at the decision
- 64% found the whole process difficult
- 62% achieved an early outline approval
- 58% received their loan within 3 weeks of applying
- 69% of those rejected after formal application expressed surprise at the refusal
- 54% did not require to put up their house as security
- 70% of formal submissions were approved
- 57% said the terms & conditions were exactly as those initially discussed
- 49% felt that the rate of interest was fair
For all we hear about Bank of England funding to lend to SMEs it is clear that there is a lot of work to be done by the banks to provide a customer friendly service. An expectations gap looms large and as long as there is a perception that service is poor, decision making opaque and rates are unfair they will struggle to win over SMEs.
Conditions are surely ripe for a new SME bank to start-up and grab a chunk of business by providing a decent service with fair rates of interest. The only surprise to come out of this was that the numbers requiring their house as security wasn’t higher.