Banks still not lending to business'

ILW

Why would they call in a loan that is safe and making them a good profit?

ILW

Thrugelmir wrote: »

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.

It is beginning to look like WWOs issues with banks are personal rather than general economic arguments.

Thrugelmir

ILW wrote: »

It is beginning to look like WWOs issues with banks are personal rather than general economic arguments.

Agree totally.

[Deleted User]

Thrugelmir wrote: »

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.

So why did they do it several times before then. Could it be you're talking bollox again?

[Deleted User]

ILW wrote: »

Why would they call in a loan that is safe and making them a good profit?

For obvious reasons. They are bust. They need to repair their balance sheets.

If they can get a loan paid off more quickly this helps their current situation.

bendix

Pennywise wrote: »

Yes, get back to having traditional bank managers who have been in post long enough to understand business and build proper relationships with their business customers and give them some authority and discretion as to which businesses to lend to. Let's get back to sensible lending limits for branch managers. Let's get away from the modern curses of the tick-box mentality and the dumbing down approach where we're stuck with wet-behind-the-ears "managers" who aren't anything more than salesmen and won't be in the branch for more than a year or two before they move on. Business lending was fine for most until the last decade or so. Let's just roll back to when it last worked.

Before the "modernisation" of the banks, our local Nat West manager had been in position for a decade or more and really knew his business customers - he had authority for lending up to £250k without referral to regional HQ and basically used his experience & judgment - OK, some didn't get the loans they wanted and others who did went down but the vast majority worked out fine. In one case, the client needed more than £250k and the manager told them it would be too much hassle and time to apply for so much, so they scaled it back to £240k on the bank loan and applied for another loan with another bank for the difference (to finance a different asset) - it all worked out in the end - client grew his business, banks got their money bank plus fees & interest.

I know two of the older style bank managers give up in the last couple of years and they both cite the reason as being too much interference from above and too much pressure to be a salesman rather than a bank manager. Both from Barclays. That's another two decent managers they've lost.

If you think that will help increase lending, you're totally bonkers.

Your proposal will mean more rigour, more assessment and more scrutiny as those old-fashioned bank managers become more personally accountable to the bank for defaults.

Banks will continue to lend to businesses they feel are good risks. That is precisely what should happen, and you describing a couple of instances where you feel that hasnt happened is not particularly useful, based as it is on your assessment, not theirs.

[Deleted User]

ILW wrote: »

It is beginning to look like WWOs issues with banks are personal rather than general economic arguments.

Hardly, it wasn't me that had their loans called in. Otherwise my regional manager and my banker tenants would have been the first to know

Buying the property outright wasn't my favoured option but it didn't prevent me from doing what I needed to do. It was just a clear example of their claims at the time to be supporting businesses and continuing lending to be lies.

EDIT: This has been widely reported in the press since the start of the financial crisis they created.

Pennywise

ILW wrote: »

Why would they call in a loan that is safe and making them a good profit?

Why indeed? But why are they not making new loans that are safe and profit making?

Trouble is that the decision makers don't understand business. For example, they fail to appreciate that goodwill has an inherent value because they can't see it. A decade ago, you'd get a loan towards the goodwill element of a business purchase - now they ignore it and only lend on bricks & mortar. No bricks & mortar means no loan, and even if there is, you're only going to get say 50-75% on the B&M (plus security on your own home) so have to finance the goodwill and the remaining 25-50% of purchase, plus stocks, F&F and debtors yourself.

When facilities come up for renewal, they're looking at today's lending criteria, not the lending criteria when the facilities were first made, and not on whether the business has met its commitments over the past few years. It's just "computer says no" when they pop the figures onto the boxes on screen. Also, it's based on current value of the bricks & mortar of both the business premises and the owner's own homes, so with property prices falling, the percentage of equity available is falling, hence some loans aren't fully secured anymore.

At the end of the day, the banks want zero risk these days. Trouble is there isn't a single business that is zero-risk - every business has an element of risk. Hence, unless you have personal assets to cover your bank loan, you're not going to get more than a nominal amount of loan/overdraft, in the same way you would as unsecured loan/overdraft - say up to £10k or so.

ILW

[quote=[Deleted User];43886836]For obvious reasons. They are bust. They need to repair their balance sheets.

If they can get a loan paid off more quickly this helps their current situation.[/QUOTE]

They also need to make profits.
They will not call in safe profitable loans, it is not in their interest.
They will be more cautious about the businesses they are lending to though.

ILW

Pennywise wrote: »

Why indeed? But why are they not making new loans that are safe and profit making?

Trouble is that the decision makers don't understand business. For example, they fail to appreciate that goodwill has an inherent value because they can't see it. A decade ago, you'd get a loan towards the goodwill element of a business purchase - now they ignore it and only lend on bricks & mortar. No bricks & mortar means no loan, and even if there is, you're only going to get say 50-75% on the B&M (plus security on your own home) so have to finance the goodwill and the remaining 25-50% of purchase, plus stocks, F&F and debtors yourself.

When facilities come up for renewal, they're looking at today's lending criteria, not the lending criteria when the facilities were first made, and not on whether the business has met its commitments over the past few years. It's just "computer says no" when they pop the figures onto the boxes on screen.

They have figured out that "goodwill" can evaporate overnight, especially in small businesses and do not want to take the risk.