Barclays reveal their short-sightedness

Barclays reveal their short-sightedness


Reports on Monday alleged that Barclays had taken the decision not to provide asset finance to firms with a turnover of less than £5 million a year. The news comes just days after the bank agreed to help SMEs as much as possible through involvement with Project Merlin.

Other lenders are now voicing their concerns over Barclay’s alleged short-sighted policy, which is sure to leave a whole host of reputable businesses without funds, simply because they do not meet high street lenders’ rigid criteria.

George Ashworth, Head of Asset Finance, at Aldermore, said: “If correct, this news will be a bitter blow to the many thousands of SMEs who have been loyal Barclays customers for many years.

“However, the reality is that small businesses do get snubbed by the big banks all the time, but they shouldn’t give up. Asset finance is still available from providers with strong balance sheets like ourselves.”

Mr Ashworth explained that whilst it is commonplace for large banks to refuse asset finance to a particular industry, if the rumours of Barclays’ latest plans prove to be true, they will have gone one step too far in ruling out so many SMEs without assessing the individual cases.

James Bloom, CEO of Regentsmead added that short-sightedness was not a condition that was unique to Barclays.

He said: “There are many viable businesses with turnovers of less than £5m who are making good profits and have good credit worthiness. Turning a business down for credit based purely on turnover is not only short sighted but it is also a dangerous lending policy which determines a business bt its numbers and not by its true value.

“Banks are now too big to give SME’s the service they need and rather than spend the time required to offer this service they are simply closing the doors. This was the cause of the current credit freeze and until things change, the recovery will not truly take hold.”

Whether Barclays choose to take this latest radical step in restricting asset finance or not, everyone in the industry is in agreement that SMEs are the veins of our economy and need help in the present climate.

Mr Ashworth commented: “Small business banking is of vital importance to the UK economy and more than 60% of SME’s currently use asset finance in some way.”

“SME’s are the engine for growth and regeneration in the beleaguered UK economy. This news underscores the reality that lending to small businesses by the large banks has been falling steadily by over £10 million per day for a considerable period.”

By Katie-Jill Rowland

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