The director of business development at Boost Capital, an SME-financing firm that aims to lend to businesses in five days, said despite the government’s efforts to reinvigorate mainstream bank lending to small companies, little had been done to cater to growing demand.
Mr Carson, who worked for HBoS for more than 30 years, criticised how banks had responded to “desperate” demand from SME owners to access finance by refusing to adapt their restrictive criteria.
Whereas most SMEs wanted flexible finance options and short-term loans, banks had refused to take this on board because it was not profitable to them, according to Mr Carson.
He said: “Banks do not lend and are paying lip service. Even though these banks have government money, they are still run by a board that does not like being told what to do.
“Also, banks look to do things over five years. They do not make money on 12-month funding because of the rates they charge. People are desperate to grow their businesses, but the banks are not helping them.”
According to Mr Carson, part of the problem with banks is that they have not evolved in line with changing business trends.
He said the demand for bricks and mortar as security for a loan had ruled out a large number of SME candidates, and he likened the overall approach of banks to a slow oil tanker.
He added: “The old-fashioned banking system is slow and ponderous like an oil tanker.”
Adviser view
Philip Milton, managing director of Devon-based IFA Philip J Milton & Co, said: “Banks are failing abysmally on so many fronts. I wish it would be different, but sadly, despite lip service with personal bankers and business representatives, they seem to be missing the main points all too often.”
