Business banking in the UK has again come under fire today, but not by the media or the SME and company formation sector, but surprisingly from the head of the Bank of England, Mr Mervyn King. This may surprise many small business owners, who have been speaking out about the negative impact restricted lending has had on enterprise since the economic downturn began.
Yesterday, Mr King stated that it is extremely tough to witness how the banks are crippling small businesses in the UK. King went on to describe how having restricted access to finance could result in some small businesses going into administration, which would stunt the country’s already fragile economic growth.
King then went on to say that he blamed banks for failing to create trusting relationships with small businesses and failing to communicate to small businesses and recently formed companies the reasons why their business loan had been refused and why the administrative cost of existing finance arrangements had increased.
He claimed that better communication would not only help re-establish a trust between the small businesses and banking sector, it would also help the country’s overall financial recovery.
This latest criticism of the banking sector comes in the light of a recent report which found that most small businesses or recently formed companies have more than one banking relationship.