WE have received an enormous response from small-business owners who are angry
at the way they are being treated by the banks and, in particular, the way
the government’s Enterprise Finance Guarantee scheme is being administered.
Here are some of your letters.
No aid at all in hard times
I RUN a small dress shop. I enquired about funding under the new enterprise
scheme offered by the government for loans of between £1,000 and £1m to help
small businesses. I was told the minimum they would lend was £25,000. I
don’t need that kind of money - just a loan of between £6,000 and £8,000 to
help me out of overdraft and pay off a credit-card balance while leaving a
little extra to keep me in the black. I was also told that all the usual
bank criteria would apply as for any other loan. They would look at my
current status and books and, if they were not showing a viable business, I
would not qualify. What business is viable at the moment? The whole reason I
needed some help was to see me through the bad patch.
Sandra Thompson
owner of Cachet
Easingwold, Yorkshire
Good firms are punished
I AM LIVID. I run a small electronics business in Gloucestershire (12
employees, £700,000 turnover). We design and manufacture a new transformer
technology and are the second-largest company in the world in our field. I
have been trying to get a loan under the Enterprise Finance Guarantee scheme
and have so far been turned down by Lloyds (my existing bank), HSBC and
NatWest (they all want additional personal guarantees, on top of my already
considerable commitment).
The scheme seems to be nothing other than government spin to win votes but
with no actual use to any small business. If you have no assets, you qualify
for help. But if you have been successful and have some assets, you don’t
qualify for help. Can anyone explain that one to me?
Dean Curran
managing director of Himag Solutions
Stroud, Gloucestershire
Owners take all the risk
I AM a director and significant shareholder in a medium-sized company that
recently approached our long-standing bank Barclays for a £100,000 loan. We
have a good track record and have repaid a loan of £30,000 on schedule.
Having been told by Barclays that we would be put forward for the new
scheme, the directors were shocked to discover that either the government or
Barclays is insisting on guarantees from all the directors. We would be
charged 8% over Bank rate yet the directors would be shouldering all the
risk and the government and Barclays none. This makes a mockery of the
entire scheme.
The contrast with the government’s approach to funding the banks could not be
greater. Not only are the directors not required to take any personal risk,
the funding is used to finance outrageous payoffs for failed management.
Steve Meeks
Manchester
We need real action now
THE government is making big noises about helping small firms but this is not
the case. It’s just hot air and needs exposing as such. These are
extraordinary times and not of our making. Britain needs to keep
manufacturing industry going, retain skills and work our way out of the
crisis. We need action and we need it now.
Richard Evans
director of Mechatronic Solutions
Sheldon, Birmingham
Get bills paid on time
POLITICIANS need to understand that the banks’ interpretation of the
Enterprise Finance Guarantee scheme renders it useless. How can the
government help? Simply mandate quoted companies to settle their bills in 30
days or risk instant fines. Small business has become the new banker for big
business.
Tim King managing director of 2sms.com Cranfield Government helps itself THE
Enterprise Finance Guarantee (EFG) scheme need not have been invented; the
Small Firms Loan Guarantee Scheme (which has been suspended since the
creation of the EFG) should have been relaunched with adjusted limits and
the ability to use it to reorganise existing debt. The EFG simply serves to
bulk up the list of initiatives launched to “help” businesses.
Paul Greetham
Halifax
Needs of firms are ignored
THE fundamental problem with the Enterprise Finance Guarantee scheme is that
it allows the banks to make the lending decision based on their commercial
criteria – not the needs of the economy. Right now those criteria are mainly
about avoiding any risk. This means that the only businesses that are likely
to qualify are ones that don’t actually need funding urgently.
Andrew Partridge
London
Readers can e-mail their views to smallbusiness@sunday-times.co.uk
