Banks still not lending to business'

Thrugelmir

Pennywise wrote: »

I think I know where you're coming from in that a lot of businesses these days seem to expect bank loans for working capital, i.e. stock, tax bills, etc., which you rightly say aren't really appropriate for bank loans and should have been saved for via trading profits.

I'm not suggesting that funding should come entirely from retained profits. Merely that as the business has previously made profits and in some form these have been distributed. As a potential lender (or even investor) I would not consider it unreasonable for the capital base of the business to be expanded, i.e. share issue. To show committment to the current proposals.

[Deleted User]

ILW wrote: »

I think the big question that nobody has an answer to is-

Do we want more lending from the banks to businesses which by definition means less stable banks?

From my experience, banks are currently more than happy to lend to virtually risk free businesses, but a lot of the demand is from the higher risk ventures.

The banks are weak for reasons other than their lending to small businesses. Bulk buying crap assets they didn't perform due diligence on was for example a much bigger cause of their own demise.

We bailed them out partly to protect lending to small businesses as they are collectively far more valuable to employment and the economy as a whole.

So yes we want continued lending to small businesses and the banks to repair their balance sheets more slowly as the broader economy improves.

Thrugelmir

[quote=[Deleted User];43884006]
So yes we want continued lending to small businesses and the banks to repair their balance sheets more slowly as the broader economy improves.[/QUOTE]

Unfortunately the banks are at the mercy of the whims of the international money markets not the economy. Along with the capital regulatory requirements of Basle III.

Not forgetting the Treasury support that still has to be repaid by the end of 2012.

[Deleted User]

Thrugelmir wrote: »

Unfortunately the banks are at the mercy of the whims of the international money markets not the economy. Along with the capital regulatory requirements of Basle III.

Not forgetting the Treasury support that still has to be repaid by the end of 2012.

I disagree, they're calling in loans that haven't even had defaults on to accelerate their recovery at the expense of those that bailed them out. This latest bit of news will no doubt be spun as an argument for further support.

Regardless of which of us is right, neither case supports the argument for continuing to prop them up.

Thrugelmir

[quote=[Deleted User];43884776]I disagree, they're calling in loans that haven't even had defaults on to accelerate their recovery at the expense of those that bailed them out. [/QUOTE]

Easy to say without substance and knowledge of the individual circumstances concerned.

ILW

I think it is unlikley that many banks are calling in loans from businesses that are truly viable. I do know of one or two cases where the lending is just putting off the inevitable for a litte while though.

Thrugelmir

ILW wrote: »

I think it is unlikley that many banks are calling in loans from businesses that are truly viable.

I have seen instances of overdraft facilities that are being progressively cut. Particularly where the facility isn't being used fully. So in that manner is logical.

[Deleted User]

Thrugelmir wrote: »

Easy to say without substance and knowledge of the individual circumstances concerned.

I know the details of one case, a friend of mine, another victim of Natwest. No defaults on his loans which were effectively mortgages, similar terms, etc and provided when he asked for commercial mortgages.

I have first hand experience of their reluctance to lend. I actually had the cash to buy a property outright but they came out with several excuses before settling on 'we think you have too much on your plate'. I had already committed to buy it at auction so it was fortunate I could afford it without a loan. The business manager privately admitted they were just not lending at the time (late 2008).

[Deleted User]

ILW wrote: »

I think it is unlikley that many banks are calling in loans from businesses that are truly viable. I do know of one or two cases where the lending is just putting off the inevitable for a litte while though.

And businesses that are viable.

The main criteria seems to be what personal guarantees has the business owner given and what assets do they know he has.

If they can use some flimsy excuse and call in the loan which isn't too hard as there is not as much protection for a business as an individual. They can use those guarantees to make sure that the loan is paid off in full from the business owners own assets.

Obviously this can cause a business owner with a healthy business to suddenly go bust and be selling off his personal assets despite positive cashflow.

Another very sleazy trick devised by the people who work for the banks.

Thrugelmir

[quote=[Deleted User];43885540]
I have first hand experience of their reluctance to lend. I actually had the cash to buy a property outright but they came out with several excuses before settling on 'we think you have too much on your plate'. I had already committed to buy it at auction so it was fortunate I could afford it without a loan. The business manager privately admitted they were just not lending at the time (late 2008).[/QUOTE]

There's no right to borrow money. Seems that you didn't fit NatWest's policy or lending criteria at the time.

Property investment doesn't fall into the category of lending to SME's.